National Express reports 10% rise in pre-tax profits, raises dividend

Strong growth outside the UK helped National Express, the bus and coach operator, to avoid the revenue slowdown that has affected many other UK public transport companies and post pre-tax profits for 2016 up 10 per cent to £120m and to raise its dividend.

The gains were driven by an 18 per cent increase to £84.7m in segment operating profits in the company’s coach business in Spain and Morocco and a 26 per cent increase, to £84m, in the same measure in the company’s North American operations.

The figures come just over a month after the company, once the UK’s biggest bus and train operator, announced the sale of the c2c commuter operation in Essex, its last UK rail franchise, to Italy’s Trenitalia.

The company’s remaining UK bus business, focused on the West Midlands, suffered from the same declines in revenues and profits that other UK public transport operators have reported, with operating profits declining 5 per cent to £35.5m. The core UK coach operations benefited from price competition with rail and from strikes on Southern Rail, reporting operating profits up 3 per cent to £33.3m.

Excluding revenue from c2c, group revenue rose 20 per cent to £2.1bn. The commuter operation contributed another £175m in revenue.

Dean Finch, chief executive, said the results were “strong”. The group’s normalised pre-tax profit of £175m was well ahead of the consensus estimate of £166m.

Mr Finch went on to suggest the company would pursue fresh acquisitions following the exit from UK rail.

“We have developed a strong track record and team in identifying and completing acquisitions that generate significant value and we have identified a strong pipeline of further opportunities,” he said.

The company was demonstrating its confidence in the future by increasing its projection for 2017 free cash flow to £120m and increasing the proposed full-year dividend by 8.4 per cent to 12.28p.