Stagecoach posts higher revenue despite challenges - UPDATE

Bus and rail operator Stagecoach reported higher revenue across its businesses, particularly its UK bus networks, despite facing "a number of challenges" in increasing profit.Stagecoach said its UK regional buses boosted revenue by 4% in the 12 weeks to 20 July, although like-for-like passenger volumes rose by just 0.9%.Commercial fare income contributed most to the overall revenue rise, but concessionary, contract, tendered and school revenue also continued to increase. Stagecoach has hiked fares by an average of 3.5% this year and has also boosted revenue with ticket offers and efficiency improvements.The group's contract bus operation in London, which provides services for Transport for London, boosted revenue by 14.4% as two new contracts began, although the business took a hit from disruption caused by roadworks.The company, which runs the South West Trains and East Midlands Trains rail franchises, said the division's revenue rose 4.9% despite big increases in premium payments to the government. It added that trading in its joint venture with Virgin to run long distance services on the West Coast main line was strong.It expects extensions to both franchises to be announced after next year's UK general election and said it was optimistic about UK rail prospects despite losing out on a bid to run London's Docklands Light Railway.Its Megabus.com coach business in the US lifted revenue by 14.9% in the three months to 31 July, although the North American operation as a whole, which includes other bus businesses, achieved a 4.9% increase.It said trading in North America was competitive, but it was still positive about the business.Stagecoach said in a trading update: "Although there are a number of challenges to growing profit in the year ending 30 April 2015, overall current trading is satisfactory and we remain on course to meet our expectations for the year."Shares in Stagecoach rose 4.4p or 1.2% to 363.9p at 14:42 in London.PW