Stagecoach has announced plans for a major expansion in the US after seeing a huge increase in regional bus revenues.
The Perth-based group – which has 8,000 vehicles serving 2.5million people a day – said Britain was getting “back on board the bus” as it delivered another robust performance in its bus and coach divisions.
Overall bus earnings, up 0.1% to £76.9 million, were impacted as it came up against tough comparisons with its performance during the 2012 Olympics, but profits from regional operations grew 5.6% with that hit stripped out.
Its London bus business saw operating profits rise 15.7%, although revenues slipped 0.9% due to the Olympics comparison.
Market analyst Invetec described the group as a “quality business” yesterday.
“A 15.7% operating profit margin in UK Bus (Regional) remains one of the best in class,” Investec said.
“We acknowledge that the stock might pause, after the strong run, but this is still a quality business.”
Stagecoach said people were increasingly ditching cars in favour of travelling by bus and coach in the UK and US, where it operates about 2,800 buses and coaches, including its Megabus operation linking around 100 locations.
Earnings jumped 40% in its North American business after like-for-like revenues increased 7.5% and it said it was on track to deliver a “significant” increase in earnings for the full year.
It also plans to ramp up its presence in the US, where it already operates in 40 states, while it is also considering rolling out premium day and overnight services to new locations.
Chairman Brian Souter said: “North America presents huge opportunities for the group.
“The current high proportion of travel by car means there is a significant potential market for our commuter and intercity bus services.”
Overall group pre-tax profits rose 2% to £98.5million in the six months to October 31.
Earnings slipped 2.7% to £18million in its rail business, which includes South West Trains and East Midlands Trains.
The group said growth in rail revenues – up 3.3% – had also been hampered by the Olympics comparison from a year earlier.
It added that discussions had not progressed as quickly as hoped with the Department for Transport on planned extensions to the South Western and West Coast rail franchises, although it expected talks to conclude in the second half of 2014.
Virgin Rail, in which it holds a 49% stake, operates the West Coast Main Line and will continue to run the franchise under a temporary deal until at least 2017 after the government’s botched re-tendering saga.
It said the Virgin Rail Group joint venture suffered an 80% plunge in earnings in the first half due to the change in contract for the franchise, although revenues lifted 6.1%.