Mobico Group PLC on Thursday said it swung to a first half loss, as operating costs offset revenue gains, and pointed to improved performance when taking into account its transition away from ‘significant’ Covid-19 support.

The Birmingham-based public transport provider, formerly known as National Express Group PLC, swung to a pretax loss of £23.4 million from a profit of £20.5 million a year earlier.

Revenue was up 19% to £1.57 billion from £1.32 billion, but this was offset by operating costs rising 22% to £1.56 billion from $1.28 billion. Furthermore, finance costs rose 47% to £33.8 million from £23.0 million.

Mobico highlighted revenue growth across all business lines, including price increases of over 13% on the 40% of contracts that were up for renewal this bid season in North America. UK revenue meanwhile was up 20%, reflecting strong growth in Coach and Bus passengers which was partly offset by the impact of reduced Bus funding.

Mobico declared an interim dividend of 1.7 pence, up from nothing a year earlier. With its 2022 results, it reinstated its dividend scheme with a 5.0p per share payout.

‘2023 is a year where the group transitions away from significant Covid-19 support. We saw strong revenue growth in the first half, driven by customer demand. The profit result compared to prior year was impacted by a £60 million reduction in Covid-19 funding. Although operating profit was down on the year, once the £60 million reduction in 2022 Covid support is taken into account, adjusted operating profit grew significantly,’ said Chief Executive Ignacio Garat.

Adjusted operating profit in the first half fell to £57.5 million from £90.5 million a year earlier. Looking ahead, Mobico expects adjusted operating profit for 2023 in the range of £200 million to £215 million. In 2022, underlying operating profit was £197.3 million.

Garat continued: ‘In addition, we have seen significant wage inflation however, we expect this to be recovered - as planned - in the second half. Although there remain some market uncertainties, encouraging passenger growth, pricing power, continued pipeline conversion, high levels of contract retention, the actions we have taken on pricing and costs, and the ongoing successful mobilisation of contracts all support our confident full-year outlook.’

Shares in Mobico were down 6.9% to 99.51p each in London on Thursday late morning.

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