National Express shares rise sharply as rail strikes boost demand for coaches and revenues shrug off dispute between drivers
- In the UK, National Express saw first-quarter sales rise 27% year-on-year
- Firm’s UK Bus arm was hit by a six-day strike by bus drivers during the period
National Express has reported an increase in sales in the first quarter, driven by an improvement in UK buses and German rail.
The group saw sales rise 25 per cent to £774.4 million, in line with expectations, with Spanish subsidiary ALSA reporting strong growth, particularly in long haul and Morocco.
UK revenues were up 27 per cent year-on-year, while scheduled bus revenues were up 87 per cent on the previous 12 months, reflecting the recovery from the 2021 Covid-related network shutdown and the impact of rail strikes.
On the rise: National Express saw its share price rise sharply on the back of an optimistic update
National Express shares were up sharply today, rising 5.9 percent or 6.80 p this morning to 122.10 p, after falling about 48 percent over the past 12 months.
The company’s UK Bus division was hit by a six-day strike by bus drivers during that period.
The group said: ‘During the quarter, the company was impacted by the now settled bus drivers’ strike in the UK and the associated wage settlement.
“While that paycheck was higher than expected, we are working internally and with our partners Transport for West Midlands to mitigate the impact of this and other cost increases.”
The company’s German rail business rose 10 percent from 2022 levels, following the continuation of the Lot 1 contract on a contingency basis, with plans “well advanced” to move to the German rail network from the end of this year. 10-year contract.
National Express said it expected an average price increase of 13 percent for US bus contracts expiring in the current bidding season.
It added that it was also implementing a wide range of productivity improvements and cost reductions in response to the ongoing uncertainties in the industry and economy, without compromising frontline functions or growth capacity.
A November bond refinancing is expected to increase annualized incremental interest costs by around £12 million, the company said.
Ignacio Garat, CEO of the National Express group, said: ‘I am pleased to report another quarter of progress at National Express with group earnings in line with expectations, albeit impacted by the UK bus drivers’ strike, and recognizing that the key trading periods for our school bus business in the US and in the UK and Spain are still ahead.”
Victoria Scholar, head of investment at Interactive Investor, said: ‘Shares in National Express are trading more than 5 percent higher after keeping its full-year outlook unchanged.
First quarter turnover was £774.4 million, up 25 per cent year-on-year on the back of a strong recovery in UK bus transport and German rail. Sales in the UK grew 27 percent in the first quarter and sales in North America grew 21 percent.”
She added: “In March annual revenues surpassed pre-pandemic levels for the first time and UK operations were profitable thanks to strong demand for coaches amid the rail strikes.
“Year-to-date, stocks have underperformed the broader market, losing nearly 10 percent and falling nearly 50 percent over a one-year period.”