National Express shares rise sharply as rail strikes lift demand for coach travel and revenues shrug off driver dispute
- In the UK, National express saw revenue rise 27% year-on-year in the first quarter
- Firm’s UK Bus arm was affected by a six-day bus driver strike during the period
National Express has reported a rise in first-quarter revenues driven by an improvement in UK buses and German rail.
The group saw revenues increase by 25 per cent to £774.4million, in line with expectations, with its Spanish subsidiary ALSA reporting strong growth, particularly in long haul and Morocco.
UK revenues rose 27 per cent year-on-year, with scheduled coach revenue up 87 per cent on the previous 12 months, reflecting the recovery from the Covid related network shutdown in 2021 and the impact of the rail strikes.
On the up: National Express saw its share price rise sharply on the back on an upbeat update
National Express shares rose sharply today and were up 5.9 per cent or 6.80p to 122.10p this morning, having fallen by around 48 per cent in the last 12 months.
The firm’s UK Bus arm was affected by a six-day bus driver strike during the period.
The group said: ‘During the quarter, the business was impacted by the now settled UK Bus drivers’ strike, and the associated pay settlement.
‘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.’
The firm’s German rail business rose 10 per cent on levels seen in 2022, reflecting the continuing operation of the Lot 1 contract on an emergency basis, with plans ‘well progressed’ to transition to the 10-year contract from late this year.
National Express said it expected a 13 per cent average price increases on US bus contracts expiring in the current bid season.
It added that it was also implementing a wide-ranging productivity improvement and cost-cutting scheme in response to ongoing industry and economic uncertainties, without cutting front-line roles or capacity for growth.
A bond refinancing in November is expected to increase incremental annualised interest costs by around £12million, the company said.
Ignacio Garat, National Express group chief executive, 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.’
Victoria Scholar, head of investment at Interactive Investor, said: ‘Shares in National Express are trading higher by over 5 per cent after it kept its full-year outlook unchanged.
‘First quarter revenue hit £774.4million, up 25 per cent year-on-year thanks to a strong recovery in UK coach and German rail. UK revenue grew by 27 per cent in the first quarter and North America revenue grew by 21 per cent.’
She added: ‘In March, annual revenue surpassed pre-pandemic levels for the first time and its UK business was profitable thanks to strong demand for coaches amid the rail strikes.
‘Year-to-date, shares have underperformed the wider market, shedding nearly 10 per cent and are down nearly 50 per cent over a one-year period.’
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