Business

National Express returns to profit as revenues grow at fastest pace in 10 years

National Express returns to profit as easing curbs persuade passengers to get back on the bus

  • The Omicron variant slowed the recovery in passenger volumes earlier this year
  • National Express’s revenue has grown at its fastest rate in ten years
  • Its UK business suffered losses in the first half of the year despite a 359% rise in bus revenue

National Express returned to profit as the gradual lifting of travel restrictions led to a revival in bus ridership.

The transport company posted a profit of £15.8m for the first half of 2022, against a loss of £24.1m last year, when many services were suspended after countries imposed strict nationwide lockdowns.

Demand has been further affected by growing caution about public transport due to concerns about the spread of the coronavirus, which has led some to use their cars more often.

Recovery: National Express made a profit of £15.8m in the first half of 2022, compared to a £24.1m loss last year when many services were suspended

As these fears and restrictions have subsided, the group has seen a significant recovery in ridership, although this has been somewhat slowed by the spread of the Omicron variant.

However, total half-year revenues increased at the fastest rate in a decade, jumping by a third year-on-year to £1.32 billion.

Almost 50 percent of the sales growth came from the Spanish subsidiary of the firm ALSA, which benefited from record passenger volumes to Morocco and the great popularity of long-haul routes.

That helped the segment’s underlying operating profit nearly triple to 59.7 million euros, down just 9 percent from 2021 earnings.

By comparison, the company made a loss on its UK business, despite a 359 per cent increase in bus revenue thanks to a boom in demand for long-distance travel and airport transfer services.

The division still managed to turn a profit in the second quarter after passenger numbers rose from March, then hit exceptionally high levels during the Platinum Jubilee celebrations and Glastonbury Festival.

Continental success: National Express' Spanish subsidiary ALSA benefits from record passenger volumes to Morocco and the huge popularity of its long-haul routes

Continental success: National Express’ Spanish subsidiary ALSA benefits from record passenger volumes to Morocco and the huge popularity of its long-haul routes

National Express predicts further growth in UK bus travel this year, while in the medium term it believes the cost of living crisis could persuade more Britons to take the bus.

It also expects to capture another £150m in future revenue from 16 contracts bought in the six months to June, eight of which were won by its North American transport business.

Revenue from shuttle services eclipsed pre-pandemic levels after growing 28 percent, 20 percentage points higher than the school bus business, where a shortage of drivers has left some contracted routes out of service.

Chief executive Ignacio Garat said the company “is taking all possible measures to mitigate the deficit in the entire industry”, with the average salary being raised to 12 percent in the coming academic year.

National Express expects rising wage costs to be offset by contract extensions and driver vacancies, but it has warned that margins in its North American business will fall in 2023.

However, a strong recovery in demand, recent contract awards and £2.1bn of potential business has led the firm to maintain its annual guidance and forecast a full-year dividend return for the 2022 financial year.

Garratt added: “The road ahead will not be without challenges. However, we believe that we are well positioned in terms of inflation and resilience to a slowdown in economic growth.”

National Express Group shares closed 1.6 percent lower at 176.2 pence on Thursday, although their value has fallen by about 30 percent over the past six months.

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National Express returns to profit as revenues grow at fastest pace in 10 years

Source link National Express returns to profit as revenues grow at fastest pace in 10 years

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