Stagecoach reports higher profits

The Perth-based transport firm said operating profits grew 25 per cent to £240.2m in the year to April 30, as revenues increased in all of its divisions.

Its UK rail arm, which runs the South West Trains commuter franchise and East Midlands Trains, saw revenues growth of 4.2 per cent to £1bn, while operating profits increased by 16 per cent to £48.4m.

Virgin Rail, in which it owns a 49 per cent stake, notched up sales growth of 10.5 per cent, while its share of operating profits increased 55 per cent to £39.5m.

The company’s regional UK bus division - which operates in cities including Hull, Liverpool, Newcastle and Manchester - saw sales growth of 2.1 per cent to £893.6m. Operating profits rose 21 per cent to £153.1m.

Chief executive Sir Brian Souter said the company had seen further evidence of modal shift as consumers look for alternatives to the rising cost of motoring and increasing road congestion.

He added that the move towards green forms of transport will provide a boost to the business, while public transport will be at the heart of next year’s Olympic Games in London.

Total revenues for the year were up 10 per cent to £2.4bn. Its regional bus business, which operates in 100 towns and cities in the UK, saw like-for-like passenger numbers increase by 0.9 per cent. It said it also benefited from “modest” fare increases over the year, while its profit margins remained among the best in the industry.

The grant it receives from the Government to run its bus services will decrease from April 2012 while its fuel costs will rise, which will lead to higher fare increases this year.

But the group is confident it will at least maintain its operating profits as the cost of motoring also continues to rise.

In London, where it is the third largest bus operator after buying the East London Bus Group last year, it recorded revenues of £133.6m and made an operating loss of £5.9m. But it thinks it will turn a profit this year as it is getting rid of underperforming contracts.

Its rail business benefited from above inflation fare increases, which rose by one per cent above RPI inflation in January and will rise by three per cent more next year.

South West Trains and East Midlands Trains saw an increase in passenger numbers although East Midlands made a loss in the year.

The group has been shortlisted for the Greater Anglia and Intercity West Coast rail franchises.

Total pre-tax profits rose 52 per cent to £191.2m, and was also boosted by a strong performance from its businesses in the US.