Profit warning from transport group
Stagecoach says Paris attacks deter travel between cities
Bus and rail firm Stagecoach has warned of lower profits following the Paris terror attacks which it blames for discouraging passengers from travelling to cities.
The company said revenue growth had slowed for parts of its inter-city rail and bus operations in the UK and continental Europe since the attack on 13 November which left 130 people dead.
The warning wiped 14% off the firm’s share price in early trade.
Stagecoach, which operates Megbus.com services operate across the continent, said: “We believe that revenue has been adversely affected by the terrorist attacks in Paris discouraging people from travelling to major cities.”
It said expected growth rates to recover, but it had also seen weaker than expected revenue at a number of its regional UK bus businesses.
As a result the firm has “modestly revised down” its forecast of adjusted earnings per share for the year ending 30 April 2016.
“Notwithstanding these and other short-term challenges facing our sector, we have a strong portfolio of public transport businesses capable of delivering long-term value to our customers and shareholders,” it said.
Half-year results showed revenues surged 28% to £1.97 billion in the six months to the end of October though pre-tax profits slipped 8% to £90.8m, weighed down by financing charges.
There has been revenue growth in its UK bus and rail businesses but in the US, demand for coach services has been hit by the fall in oil prices making car driving cheaper.
Stagecoach chief executive Martin Griffiths (pictured) said the company was investing in making travel better and easier for customers and called for the public sector to “tackle the growing challenge of road congestion” which also weighed on its bus business.
The company said: “We remain positive on the opportunities to develop further the group’s business. In bus, we see prospects for further organic growth in our well-established businesses as well as opportunities to further invest in the expansion of our megabus.com inter-city coach operations, particularly in continental Europe. In rail, we expect opportunities to bid for a number of franchises over the next two years.”