East Coast rail franchise delivers boost for Stagecoach
- Credit: Ally Carmichael/Newscast
Stagecoach said today that annual earnings within its bus business had fallen short of its hopes as plunging prices at the petrol pumps hit demand for public transport.
But the group, which also runs rail services including the London-to-Scotland East Coast Main Line in a joint venture with Virgin, still saw underlying pre-tax profits rise 2.4% to £185million in the year to April 30.
Stagecoach said operating profits at its bus division fell “a little short of the targets we set ourselves at the start of the year”, with earnings at its regional bus arm – which includes a Cambridge-based operation extending to towns including Bury St Edmunds, Newmarket and Haverhill – falling by 4.3% to £141.1million.
It said as well as the lure of cheaper car travel impacting its bus business, its extensive Manchester service also faced increased competition from rivals.
The group’s megabus.com coach operation in the United States was likewise dealt a blow by the falling price of fuel, although it said this would also help the group by lowering its own fuel costs for the next two financial years.
Stagecoach’s rail business fared better over the year as its joint venture with Virgin Rail, in which Stagecoach has a 49% stake, saw earnings leap to £28m in the year to April 30, up from £2.6m a year earlier.
It took over the East Coast franchise in March and said the full effects of the new contract would be felt in the current financial year.
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The wider UK rail business, which also includes East Midlands Trains, which includes some services to Norwich and Ely, and South West Trains, saw earnings drop 22% to £26.9m due to rises in premium payments to the Government, but a rise in passenger numbers helped drive an 18.1% rise in revenue at the division.
Martin Griffiths, chief executive of Stagecoach, said: “These are a solid set of results notwithstanding continued tight central and local government spending, and increased competition for public transport from the private car driven by lower fuel prices.”