(Alliance News) - National Express Group PLC on Wednesday said its first quarter was in line with expectations, as it launched a productivity improvement and cost reduction programme amid concerns about continued uncertainty in the transport industry.
Shares were 4.5% higher at 120.50 pence on Wednesday morning in London.
The Birmingham-based public transport provider reported revenue of GBP774.4 million in the first quarter of 2023. National Express said this was as expected and 25% higher than the same quarter of 2022.
In North America, revenue grew by 21% against the previous year. The company noted that contract pricing increases have been good in the region and added that, based on progress to date, it expects to achieve an average price increase of 13% across the portfolio of expiring contracts.
In the UK, revenue grew by 27% against the previous year. UK scheduled coach revenue specifically was up 87% on the prior year, reflecting the recovery from the Covid-related network shutdown in the prior year and the impact of the rail strikes in the UK.
National Express said that business in the UK during the quarter was hurt by the now settled UK bus drivers' strike.
"Whilst that pay settlement was higher than expected, we are working internally, and with our partners Transport for West Midlands, towards mitigating the impact of these and other cost increases," it said.
The company added that it has placed an order for 170 additional double-deck electric buses, saying that the resulting fleet will be the largest of its type in the UK.
Chief Executive Ignacio Garat said: "I am pleased to report another quarter of progress at National Express with group revenues in-line with expectations, albeit affected by the bus driver strike in the UK, and recognising that the most significant trading periods for our US School Bus and UK and Spanish coach operations still lie ahead.
"Given ongoing industry and economic uncertainties, we have launched a wide-ranging productivity improvement and cost-reduction programme that will start to deliver benefits in the second half of this year. That initiative will also help to ensure we deploy the right resource most efficiently across the business and capitalise on the significant opportunities for growth that we face."
National Express said it is targeting at least GBP25 million in annualised savings under the productivity improvement and cost-reduction programme. It expects to see the first beneficial impact of those actions delivered in the second half 2023.
National Express said that fuel hedges are in place covering 100% of its 2023 volumes, 59% of its 2024 volumes, and 26% of its 2025 volumes. It also noted "a number of mechanisms" to mitigate the impact of wage settlements, pointing to long-term supply agreements on the majority of its remaining non-staff costs.
By Heather Rydings, Alliance News senior economics reporter
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