(Alliance News) - Stagecoach Group PLC on Wednesday reported a sharp drop in annual profit, as its UK bus and rail businesses struggled amid the coronavirus pandemic.
Shares in the public transport firm were 4.9% higher in London on Wednesday mid-morning at 52.90 pence each.
In the year ended to May 2, Stagecoach's pretax profit more than halved to GBP40.6 million from GBP101.2 million.
"The change in operating profit reflects the adverse effect of the Covid-19 situation on the operating profit of the regional bus operations since March and the end of the East Midlands and West Coast rail franchises," Stagecoach explained.
Revenue plunged 25% year on year to GBP1.42 billion from GBP1.88 billion. The lower revenue also reflected the end of the Virgin Trains East Coast franchise in June 2018 and the end of the East Midlands Trains franchise in August 2019.
Chief Executive Martin Griffiths said: "We have achieved a creditable set of financial results in what has been one of the most challenging and sobering periods for citizens, communities and economies across the globe in living memory."
UK Bus revenue was down 3.0% year on year to GBP1.01 billion, while UK Bus London revenue slipped 2.6% to GBP246.2 million. UK Rail revenue dropped 73% to GBP161.1 million due to the end of the two franchises.
Stagecoach skipped paying a final dividend, dropping annual payout to 3.8p from 7.7p the year before.
"Prior to the Covid-19 pandemic, the business was on track to meet its expectations for the full year. We made good progress in delivering on our three key strategic objectives: to maximise our core business potential, manage change through our people and technology, and grow by diversifying, while maintaining our relentless focus on safety and customer service," Griffiths said.
Stagecoach said going forward it remains difficult to reliably predict profit for the new financial year ending May 1, 2021.
"In the short-term, the actions we have taken and the continuing support of government should ensure we continue to generate positive earnings before interest, tax, depreciation and amortisation and avoid significant operating losses, and we are working to re-build profitability over time," the transport firm said.
Stagecoach continued: "We expect a lasting effect of the Covid-19 pandemic on travel patterns with an acceleration in trends of increased working from home, shopping from home, telemedicine and home education. We anticipate that it will be some time before demand for our public transport services returns to pre-Covid levels, and we are planning for a number of scenarios."
As a result, the transport company said it will continue to review its cost base, in an attempt to reduce overheads.
"At the same time, we see positive drivers for our business from a renewed societal focus on health, well-being and the environment. Public transport can play a major role in a cleaner, greener and more resilient economy and society, tackling climate change with strong government action to reduce car use," Stagecoach added.
By Paul McGowan; paulmcgowan@alliancenews.com
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