Shares in bus and tram operator Stagecoach (SGC) went into reverse, losing 2.5% to 80p, despite the firm posting better than expected revenues and earnings for the year to the beginning of May.
As passenger numbers plummeted during the first and second lockdowns, and people subsequently took to their cars rather than use public transport, revenues dropped 35% to £928 million, although that figure was slightly better than the market was hoping.
Reported operating profits fell 33% to £58.4 million, well ahead of market forecasts of £30 million, while earnings per share were little changed at 6.1p against 6.4p the previous year.
Moreover, by the end of April regional bus mileage was back to 94% of pre-Covid levels, and by the beginning of this week commercial sales were back to around 68% of 2019 levels compared with a low of just 12% at the height of the crisis last year.
NEW NATIONAL STRATEGY
The firm says it is taking action ‘to leverage potential’ from the government’s new National Bus Strategy which it is hoped will transform local travel.
‘There is significant potential to deliver healthier and more prosperous places by moving away from towns and cities built around cars to prioritising easy-to-use sustainable public transport and active travel’, says chief executive Martin Griffiths.
'Looking ahead, we see a positive outlook as our bus, coach and tram services play a critical role in tackling climate change, delivering economic recovery, and ensuring healthier and more connected communities’, he adds.
Ben Nuttall, senior analyst at research firm Third Bridge, was more sanguine: ‘Stagecoach faces some difficult structural issues around congestion, the decline of the high street, and the UK's changing demographic.’
He added: ‘The government's bus strategy marks a fork in the road for the UK bus sector. Where Stagecoach doesn't achieve the partnership model they are pushing for, foreign operators like RATPDev and Abellio are likely to swoop in - given that Stagecoach is unlikely to accept the low margin of a franchise.’
