News Column

Buses beat goals at Go-Ahead but train earnings near a cliff

February 21, 2014


GO-AHEAD'S bus business is growing revenues, though returns from the firm's rail franchises are suffering as the contracts near their end dates.

The transport group said yesterday its revenues rose 5.7 per cent to 1.37bn for the six months to 28 December, while pre-tax profits jumped 30.8 per cent to 40.3m. Margins were also higher, at 3.7 per cent compared to 3.2 per cent a year ago.

Go-Ahead said its regulated bus business was doing "very well", thanks in part to the work it won to run rail replacement buses.

Deregulated revenues were up 3.7 per cent, putting the firm slightly ahead of its three-year targets for the business.

"In October 2012 we set out a three year plan of growth and business improvement with the aim of raising the performance of our UK bus business to 100m in operating profit," said boss David Brown.

"We are making good progress, and 16 months into that timetable, our planning assumptions remain valid and we are on course for our target."

But the group repeated its warning that as the end nears on three rail franchises, time is running out to generate the profits it had forecast when it submitted bids for the work.

The firm, which operates Southern, Southeastern and London Midland, made nearly three-quarters of its revenues in rail but just a fifth of its operating profit during the half-year.

"The rail division is not expected to generate material profits in the second half of the year as the premium profile becomes more stretching and an unprofitable seven-month extension period of the Southeastern franchise begins," it added.

Go-Ahead has bid to run Crossrail and Thameslink.

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Source: City A.M. (UK)

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