(Alliance News) - Stagecoach Group PLC on Wednesday reported a mixed performance in the first half of its current financial year amid changes in markets in which the Perth-based company operates.
Separately, Stagecoach said it shuffled its board to reflect its size and ensure it has a "mix of skills and experience" that will help to drive its "continued success". This saw its co-founder step down as chair but remain on the board.
Stagecoach is an operator of buses, express coaches and trams, though no longer of trains, having lost its UK franchises.
It reported pretax profit of GBP65.9 million for the six months to October 26, up 35% compared to GBP48.9 million it delivered a year ago, despite revenue falling to GBP800.2 million from GBP1.01 billion.
Stagecoach reported a 23% reduction in its operating expenses to GBP735.5 million from GBP959.4 million year-on-year. In addition, the company said its profit was boosted by a non-repeat of GBP24.2 million cost taken a year ago in relation to the equalisation of guaranteed minimum pension benefits.
Meanwhile, the lower revenue reflects the end of the Virgin Trains East Coast franchise in June 2018 and the end of the East Midlands Trains franchise in August, Stagecoach explained.
By division, Stagecoach's UK Bus business - excluding London - delivered a "solid" performance during the first half of the year, with like-for-like sales growth of 1.6%, though this was lower than anticipated at the start of the financial year.
In London, the company's bus operations delivered a 6.2% revenue decline on a like-for-like basis, but by contrast this outperformed Stagecoach's start-of-year expectations.
Turning to the UK Rail unit, now only comprising the Sheffield Supertram business, Stagecoach said like-for-like revenue growth was 20%.
The company maintained its interim payout at 3.8 pence a share.
Looking ahead, the transport operator said its expectations for adjusted earnings per share for the full year remain unchanged, having fallen to 10.0p in the half year from 12.9p a year ago.
Beyond its existing core operations, Stagecoach said it has identified opportunities overseas as part of its strategy to diversify the business.
"We are pleased to have delivered a solid set of financial results and further improvements for our customers over the first half of the financial year," said Chief Executive Martin Griffiths.
He added: "We welcome recent government pro-bus policy and funding commitments. Combined with our own initiatives and our support for the wider UK bus industry strategy, we are well placed to benefit from the global drive for better mobility, cleaner air and action to protect the future of our planet."
In addition, Stagecoach unveiled some board changes, with Brian Souter to step down as chair at the end of the year but carry on as a non-executive director.
Ray O'Toole, a non-executive director, will be appointed as chair at the start of next year.
Deputy Chair & Senior Independent Director Will Whitehorn will support the chair transition and, as previously announced by Stagecoach, will step down from the board on June 30. At that point, reflecting the fact that an independent chair is in place, the role of deputy chair will be discontinued.
Souter co-founded Stagecoach and was its chief executive until 2013.
Souter said that "the time is right" to step down as chair. "My family and I continue to have a significant shareholding in Stagecoach, and I have every confidence in the management team, our strategy and the positive prospects of the business," he said.
In addition, Ann Gloag and Ewan Brown, both long-serving non-executive directors, will retire from the board at the end of 2019.
Stagecoach shares were trading 5.7% higher in London on Wednesday morning at 132.70 pence each.
By Evelina Grecenko; evelinagrecenko@alliancenews.com
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