National Express Group PLC ("National Express" or "the Group") is a leading international public transport group with bus, coach and rail services in the UK, Continental Europe, North Africa and North America. It today updates on trading ahead of its year end on 31 December 2013.
Overall trading across the Group has remained positive and in line with the trends reported in the third quarter interim management statement on 31 October 2013. Revenue has continued to grow strongly in UK Coach, with steady growth in UK Bus, Rail and North America. The intercity coach revenue trend in Spain continues to show improvement. Cash generation is strong and we continue to make good progress in developing our pipeline of capital-light opportunities. The Group remains on track to deliver the Board’s expectations for this year.
We continue to be successful in delivering:
- Revenue growth across all of our businesses
- Operational excellence across our businesses, driving cost efficiency and consistent earnings, which underpin our robust dividend policy
- Targeted capital allocation, in particular strengthening returns in North America and Spain
- £150 million pa of free cash flow, reducing debt in 2013 and 2014, and targeting a gearing ratio of two times by end 2014
- Investment for future profit growth in predominantly capital-light projects across new rail, bus and coach opportunities.
Dean Finch, Group Chief Executive, commented:
"Trading continues to be encouraging. UK Coach in particular has seen strong revenue growth, driven by more passengers using our competitively priced services. We are focusing investment in those areas of the Group where it makes the biggest impact to our customers and we are seeing increasing numbers of people choosing to travel with National Express, whether by coach, bus or rail.”
Total revenue in Alsa is expected to grow this year, as improving conditions in the coach market and new urban concessions have offset the impact of recession. Underlying Intercity revenue is expected to be flat in the final quarter of 2013, continuing the trend of successive quarter-on-quarter improvement following a reduction in revenue during 2012. We expect this trend to continue as better economic growth drives improved consumer confidence.
Urban revenue remains resilient, with like-for-like revenue expected to be broadly flat for the full year. Austerity will continue to limit city authority spending on services but agreements to reduce mileage and extend fleet lives will benefit, driving better capital returns. In Morocco, overall revenue growth is expected to be 13% this year. We are adding services to support demand in existing contracts and commenced operation of the new Tangiers contract in November.
Our strategy in North America School Bus is to improve the quality of our contract book by driving stronger return on capital, better renewal pricing and high contract retention through superior customer service. 2013 has seen success in delivering this programme, with 97% retention, 2% price improvement and a reduction in capital deployed as low return contracts were exited amounting to 1% of total buses. We expect to generate over US$150 million of operating cash from North America this year. Total revenue for the year is expected to increase by 10%, with good growth in the new Transit division and the annualisation of the Petermann acquisition.
Like-for-like commercial revenue has improved throughout the year and is expected to be 3% higher overall in 2013. We continue to invest in new fleet, improved on-bus quality, technology to enhance operational efficiency, customer mobile information and the progressive roll out of commercial smartcards. Our industry-leading agreement with Centro in the West Midlands is also driving service and punctuality improvements.
Our UK Coach business continues to deliver a strong performance, with lower prices in real terms offering superior value to our customers. Volume is growing by 8%, with greater demand, improved retail distribution and new contracts. Core express coach revenue is expected to increase by 9% in the fourth quarter and 6% in the full year. New Christmas Day services will meet customers’ travel needs while other transport networks are shut down.
Rail and business development
National Express has been selected by Transport Scotland for the shortlist to bid for the ScotRail franchise. The Group will now be submitting three rail tenders in the UK in the next four months (Essex Thameside, Crossrail and ScotRail), as well as starting work on the Berlin Ringbahn bid. National Express continues to bid for further rail contracts in Germany and Transit contracts in North America. Across the Group, National Express is currently bidding on contracts worth £10 billion in revenue.
In recognition of its position as one of Europe’s leading public transport businesses and strongly supporting its bid credentials, c2c has recently been awarded the European Foundation for Quality Management’s 5-star rating, the highest level attainable. Building on our success in securing two German rail contracts earlier this year, this award further boosts the international recognition of National Express, as franchising authorities look to tender transportation services. c2c remains the UK’s best performing franchise for punctuality and customer service.
The Group remains on track to deliver the Board’s expectations for revenue, profit and cash generation for 2013, supported by a strong balance sheet.
The Group will announce its results for the full year to 31 December 2013 on 27 February 2014.
National Express Group PLC
|Jez Maiden, Group Finance Director||07770 701797|
|Stuart Morgan, Head of Investor Relations||07770 701797|
|Anthony Vigor, Director of Policy and External Affairs||07767 425822|
Maitland (020 7379 5151)
|Rebecca Mitchell||07951 057351|
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. Like-for-like revenue in bus operations adjusts underlying revenue for the impact of changes in mileage operated. Gearing is the ratio of net debt to EBITDA, adjusted for the impact of acquisitions.