Pre-close trading update
Pre-close trading update
Completing 2011 in strong shape
National Express Group PLC, a leading international public transport group, operates bus and coach services in the UK, Continental Europe, North Africa and North America, together with rail services in the UK.
National Express Group PLC (“National Express” or “the Group”) releases a pre-close trading update for the year ending 31 December 2011.
National Express remains firmly on target to deliver revenue and profit growth in 2011 in every one of its divisions. Trading across the Group remains strong and full year profit is expected to be in line with the Board’s previous expectations.
Flexibility in our networks and fleet operations, a focus on optimising costs and selective investment in new services and growth opportunities combine with secure, long-term funding and cash liquidity to create a resilient, highly effective public transport business. Our strategy ensures that we are well positioned to deliver significant earnings growth in our non-rail businesses in 2012.
Dean Finch, Group Chief Executive, commented:
“National Express is finishing 2011 in excellent shape. We are growing revenue and profit in all five of our divisions. We continue to invest in new fleet and offer exceptional value to our customers, enhancing the quality of our services at prices our passengers can afford. As recent passenger growth has shown, our customers value our competitive pricing during this period of economic uncertainty. This strong foundation, coupled with a clear cost focus and the operational flexibility of our business, leaves us well positioned to pursue new opportunities to deliver value to shareholders in the future."
Transport revenue growth in Spain is expected to be 5% in 2011 and trading has remained robust after the busy summer season. Growth in the inter-city division continues to reflect the excellent competitive position of coach travel in the current economic environment. In the urban division, where the majority of business is under long-term fixed contract to city councils, we have seen a continuation of strong service demand.
The North American school bus business continues to lead its market and this year will broadly double the 2009 operating profit level. Revenue growth for the full year is expected to be 8%, following a successful start to the new school year and a significant increase in charter revenues during the year. Budgetary constraints on school boards continue to drive interest in conversion to outsourced bus operations. The previously announced acquisition of Petermann Partners Inc. is progressing through regulatory clearance, with an expected completion date in late January 2012. We continue selectively to explore new opportunities within our target markets.
2011 should see our UK Bus margins restored to above industry average levels. Commercial passenger revenue is expected to have grown by 4%. Commercial passenger numbers have recently returned to growth in the West Midlands. Our fares present real value to our customers, with National Express continuing to offer amongst the lowest average daily travel costs to its passengers. Over a 12 month period we will have introduced around 250 new buses, replacing 15% of our fleet, which is expected to drive further customer demand. Our investments in on-bus technology, smartcard ticketing solutions and targeted marketing reflect the continued growth and cost improvement opportunities available in this business.
Revenue growth in the core National Express coach network is expected to exceed 5% in 2011, with airport, long-haul and London commuter services performing particularly well. Our offer of ‘every day value’ is supported by the launch of additional new services, including new airport services linking Leeds, Manchester and Liverpool airports, and new Gatwick Airport routes. Initial sales of senior citizen coach concession discount cards are progressing well, with over 35,000 cards already sold, as part of our plan to mitigate the impact of the removal by the UK government of the half-price concession from 1 November 2011.
Rail division revenues are expected to grow by 6% in 2011. Passenger volume growth remains strong, particularly at c2c. With the EFQM quality process embedded at c2c, which continues to deliver one of the best performances in service punctuality of any UK train operator, we are well positioned to progress towards pre-qualification for the rail refranchising programme expected in 2012.
The Group will announce its results for the year ending 31 December 2011 on 1 March 2012.
National Express Group PLC
Jez Maiden, Group Finance Director } 0121 460 8657
Stuart Morgan, Head of Investor Relations }
Anthony Vigor, Director of Policy and External Affairs 07767 425822
Maitland 020 7379 5151
There will be a conference call for investors and analysts at 0830 on 20 December 2011. Details are available from Rebecca Mitchell at Maitland.
All references to revenue and operating profit are measured on an underlying and normalised basis. Underlying revenue compares the current year with the prior year on a consistent basis, after adjusting for the impact of currency, acquisitions, disposals and rail franchises no longer operated. Normalised profit is the statutory result excluding profit or loss on the sale of business, charges for goodwill impairment, intangible asset amortisation, exceptional items and tax relief thereon, for continuing operations. The Board believes that the normalised result gives a better indication of the underlying performance of the Group.
EFQM is the European Foundation for Quality Management.