Bus and train operator National Express (NEX) nudges 1.3p higher to 260p as the Digbeth-based business reports improved third quarter trading and assures full-year forecasts will be met. Strong receipts over the seasonally-important August bank holiday helped quarterly revenues 5% higher, driving year-to-date sales 3% ahead.


In today's market missive, the £1.3 billion cap flags strong passenger volume growth across a number of market segments including its UK Coach business, which enjoyed its best ever August Bank Holiday week in terms of passenger volume and revenue. Significantly, National Express says its urban bus business is benefiting from new contracts and network improvements in both Morocco, where like-for-like growth of 11% has been delivered year-to-date, as well as in austerity-hit Spain, albeit with growth limited to a pedestrian 1% so far this year.


Meanwhile turnover from the group's North American operations continues to deliver to the upside; rising 15% so far this year. The transport operator attributes this strong performance to a number of factors; not least being the full year impact of May 2012's Petermann acquisition, which expanded the North American fleet of Durham School Services – the group's US student transport subsidiary – to 20,000 buses.


c2c, the group's UK rail franchise, continues to benchmark the sector in terms of customer service and punctuality. This is putting the train operator in the vanguard when it comes to exploring rail opportunities both here in the UK and in Germany, where National Express has been shortlisted for the highly-prized Berlin Ringbahn contract.


Looking under the bonnet, group net debt at the end of September 2013 was over £40 million lower than the prior year comparative. National Express also pleases with news it remains on course to generate £150 million of free cashflow this year and states a year-end gearing target of 2.5 times net debt to EBITDA, reducing to 2 times in 2014.

Issue Date: 31 Oct 2013