Profits rise at transport giant National Express

TRANSPORT giant National Express has seen profits from its regional rail operations rise by �11m this year - despite being ruled out of running future train services in East Anglia.

National Express, which runs trains across the eastern counties and the Norwich to London Liverpool Street service, said operating profits from its UK rail division rose from �16.1m in the first half of 2010 to �27.1m in the first six months of this year.

The group credited the tight control of costs, the “relatively stronger economies of London and the South East”, and increasing rail revenues - up by 8pc to �335.1m - for the rise in profits.

But the profit announcement comes just a day after some of the region’s MPs revealed their manifesto for improvements to East Anglian rail services.

Ministers are due to reveal this autumn which train operator will replace National Express in East Anglia next year.

The MPs’ manifesto asks for greater investment in carriages, stations, speeding up the Norwich to London journey time, improving the Norwich to Cambridge link, and maximising the economic opportunity of the Olympics next year.

Three firms - Abellio, Go-Ahead (which is bidding as Eastern Railway) and Stagecoach Anglia Trains - are in the running for the franchise.

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Norwich North MP Chloe Smith described the award of the new rail franchise as a “once-in-a-generation opportunity” to improve public transport for the benefit of passengers and the Norfolk economy.

In today’s stock market trading update, National Express said: “Growth in the UK rail division has been exceptionally strong, accompanied by a significant improvement in profitability.”

The firm said its c2c franchise - running services from London to Southend - was the most punctual rail service in the country for the first half of the year.

Punctuality on East Anglia services was now at 90pc, the firm said, adding that it was continuing to invest in new carriages under an investment programme with the Department for Transport.

But having failed to be selected for the final round of bidding to run East Anglian services, National Express has been looking to win new business in the North America - where it already operates 14,000 school bus services in the United States and Canada - and in Spain.

“Both franchises (c2c and East Anglia) have a high level of commuter usage and exposure to the relatively stronger regional economies of London and the South East,” National Express said.

“A growing number of our passengers are using the Oyster pay-as-you-go system, where convenience is driving growth, albeit at a lower fare yield.”

But the group added: “Following the disappointing failure to qualify for the final round of bidding on the East Anglia franchise short contract due to start in February 2012, we continue to view the UK rail industry as an attractive additional value opportunity, alongside the group’s core international bus and coach businesses, with low investment and good cash flows.”

Profits also rose - but at a more modest rate - for the firm’s UK coach operations: rising from �10.3m in the first half of 2010, to �11.7m in the first six months of this year.

In total, National Express saw revenues rise from �1.059bn in the first half of 2010 to �1.118bn so far this year. Group operating profits rose by 23pc from �95.7m to �117.6m.

Dean Finch, National Express Group chief executive said: “We have had a strong first half, and driven margin enhancement and organic growth across our businesses. Operating profit has grown by 23pc and we have reinstated the interim dividend.

“We continue to invest in growth and are well placed to deliver further operational improvements. As we complete our margin recovery programme, we are focused on organic growth, new contract wins, and carefully targeted opportunities in attractive markets.”