Stagecoach Group PLC Trading Statement (0075L)
28 September 2016 - 4:00PM
UK Regulatory
TIDMSGC
RNS Number : 0075L
Stagecoach Group PLC
28 September 2016
Trading statement
28 September 2016
Introduction
Stagecoach Group plc is today (28 September 2016) providing a
trading update in respect of its financial year ending 29 April
2017, ahead of a series of meetings with analysts. Our expectation
of the Group's adjusted earnings per share for the year ending 29
April 2017 has not changed from when we announced our full year
results in June 2016. We note, however, that independent
macro-economic forecasts cover a wide range of possible outcomes
and therefore, there is a higher than usual degree of forecasting
uncertainty.
Revenue growth
Like-for-like revenue growth for the financial year to date in
each of the Group's main businesses is provided below.
UK Bus (regional operations) - sixteen weeks ended 20 August 2016 (1.9)%
UK Bus (London) - sixteen weeks ended 20 August 2016 (0.9)%
North America - four months ended 31 August 2016 (3.3)%
UK Rail - sixteen weeks ended 20 August 2016 1.7%
Virgin Rail Group - sixteen weeks ended 20 August 2016 4.7%
UK Bus (regional operations)
Passenger volumes continue to be weaker than we have seen in the
UK Bus (regional operations) Division in recent years. This is
partly attributable to weak underlying local economic conditions in
some parts of the UK and sustained lower fuel prices. We
continually review and adjust our bus networks in response to
changing demand. Like-for-like revenue per vehicle mile was 0.5%
below the equivalent prior year period. Notwithstanding that, we
see prospects for improving revenue trends later in the year
through enhanced marketing and the further development and
promotion of our digital offering. We remain positive on the longer
term opportunities within the UK Bus (regional operations)
Division.
megabus Europe
On 1 July 2016, the Group completed the sale of the retailing
part of the megabus Europe business to FlixBus. The consideration
was satisfied by the issue of a loan note and the Group expects
that loan note to be fully settled by the end of 2017. The Group
has also agreed that it will transfer a number of vehicles to
FlixBus, or a nominee of FlixBus, at a future date. As previously
reported, after taking account of costs incurred as a result of the
sale, we expect to report an exceptional gain on the disposal of
the business.
UK Bus (London)
As previously reported, our UK Bus (London) Division has
experienced a small net reduction in contracts with Transport for
London. However, we believe our strategy of bidding prudently is
the right one for the long-term sustainability of the business and
we still aim to deliver long-term operating margins in excess of
7%.
North America
Trading at our megabus.com inter-city coach services in North
America remains challenging due to the effects of sustained lower
fuel prices, through heightened car and air competition. The
four-month like-for-like revenue decline of 3.3% for the Division
includes 10.1% decline for megabus.com, partly reflecting the
impact of mileage reductions in response to market conditions and
customer demand. Like-for-like revenue at the other businesses in
North America grew at 0.1% and trading remains in line with our
expectations.
UK Rail and Virgin Rail Group
UK Rail industry revenue growth has slowed over the last year
and the outlook for the industry remains uncertain, particularly
given its sensitivity to economic conditions. Like-for-like rail
revenue growth in our own UK Rail Division (including Virgin Trains
East Coast) was 1.7% in the sixteen weeks, with revenue growth at
our inter-city businesses out-performing growth at our London
commuter business. Revenue growth at Virgin Rail Group's West Coast
franchise was 4.7%. As usual, revenue growth figures for relatively
short periods can be affected by factors such as the timing of
school holidays and the timing of rail industry settlements. As
previously highlighted, we believe the reduced rate of growth
reflects the effects of weakening consumer and business confidence,
increased terrorism concerns, sustained lower fuel prices, the
related effects of car and air competition, slower UK GDP growth
and slowing growth in real earnings.
We will continue to take steps to mitigate the effects of lower
revenue growth, focussing on cost control as well as additional
initiatives to grow revenue. At our Virgin Trains East Coast
franchise, which has over six years to run, we have taken a range
of positive actions aimed at significantly growing revenue over the
remaining term of the franchise. Our 2016 Annual Report provides a
flavour of some of the initiatives we are undertaking.
We continue to work constructively with the Department for
Transport and other industry partners to meet our obligations,
manage contract changes and ensure the continued stability and
growth of our rail businesses.
Interim results
In June 2016, we announced our plan for four scheduled updates
each year: results announcements in June and December, and further
trading updates around September and March. The next planned update
is therefore, the announcement of the Group's interim results for
the six months ended 29 October 2016 on 7 December 2016.
For further information, please contact:
Stagecoach Group plc www.stagecoachgroup.com
Investors and analysts
Ross Paterson, Finance Director 01738 442111
Bruce Dingwall, Group Financial Controller 01738 442111
Media
Steven Stewart, Director of Corporate Communications 07764 774680
Notes
(1) Like-for-like revenue growth is derived, on a constant
currency basis, by comparing year-to-date revenue with the
equivalent prior year period for those businesses and individual
operating units that have been part of the Group throughout both
periods.
(2) This announcement contains certain forward-looking
statements with respect to the financial performance, financial
position and businesses of Stagecoach Group plc. These statements
and forecasts involve risk, uncertainty and assumptions because
they relate to events and depend upon circumstances that will occur
in the future. There are a number of factors that could cause
actual results or developments to differ materially from those
expressed or implied by these forward-looking statements. These
forward-looking statements are made only as at the date of this
announcement. Except as required by law, Stagecoach Group plc has
no obligation to update the forward-looking statements or to
correct any inaccuracies therein.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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