Mobico Group PLC shares tumbled on Thursday morning after suspending its full-year dividend and cutting down its annual earnings target.

Shares in the Birmingham-based public transport provider, formerly known as National Express Group PLC were down 27% at 62.26 pence each.

In an update for the third quarter of 2023, Mobico said revenue grew by 10%, but said its profit was hurt by higher costs, paritcularly within its UK and North America School Bus divisions.

As a result, it now expects expects its earnings before interest and tax of between £175 million and £185 million, down from guidance of between £200 million and £215 million originally given in July.

With passenger numbers ‘slightly lower than previously anticipated’ in its UK Bus division, Ebit forecasts for the UK & Germany division have also been lowered to between £15 million and £20 million for 2023.

Mobico added it has suspended its final dividend, which Chief Executive Ignacio Garat said was a decision that ‘was not taken lightly,’ adding that the firm will continue to consider its dividend position.

On Thursday Mobico also announced plans to sell its North America School Bus business, saying now was the ‘opportune’ time to consider the disposal.

‘Such a disposal would accelerate our deleveraging whilst enhancing the Group’s financial flexibility to focus on opportunities with higher return potential,’ the company said.

‘We recognise that the recovery of our profitability will take longer than we had previously expected. That is why we are announcing decisive actions to ensure we deliver sustainable profitability from our growing revenue base. Whilst our belief in the potential of the group remains strong, we will move at greater pace with new leadership teams in the UK and North America’, added Garat.

Copyright 2023 Alliance News Ltd. All Rights Reserved.