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Growth slows at Stagecoach

27 Apr 2016

UK: ‘The outlook for the UK rail industry is more challenging than it was at this time last year’, said Stagecoach Group plc on April 27, when it published a pre-close trading update for the year to April 30 2016. ‘Although growth trends continue to vary across the different parts of the rail industry, the overall industry rate of revenue growth has slowed in recent months’, the company said.

Reflecting these ‘softer trends’, like-for-like revenue growth at the UK Rail division, principally the South West Trains and East Midlands Trains franchises, was 2∙5% in the 48 weeks to April 2 2016. Over the same period, revenue growth was 4∙9% at Virgin Trains East Coast, in which Stagecoach has a 90% stake.

Revenue growth at Virgin Rail Group, which holds the InterCity West Coast franchise, was 4∙6%. Stagecoach is the minority partner in VRG, where Virgin has a 51% stake.

‘We believe the reduced rate of growth reflects the effects of weakening consumer confidence, increased terrorism concerns, sustained lower fuel prices, the related effects of car and air competition, slower UK GDP growth and slowing growth in real earnings’, said Stagecoach. To mitigate the effects of lower revenue growth, the company has focused on cost control ‘and additional initiatives to grow revenue’.

The company said it was continuing to work with DfT and other industry partners ‘to meet our obligations, manage contract changes and ensure the continued stability and growth of our rail businesses’. At group level, Stagecoach said it was ‘on course’ to achieve its expectation of overall adjusted earnings per share for the year to April 30 2016.