National Express revenue accelerates on the back of strong overseas performances

Shares in National Express rose over 3% early on Tuesday (25 October), after the public transport operator posted growth in revenue and profit in the third quarter of its financial year, thanks to strong performances in its overseas business.

In the three months to the end of September, the FTSE 250-listed group posted a 17%-year-on-year increase in revenue, while pre-tax profit on a constant currency basis was 9% higher than in the corresponding period in 2015.

Revenue in North America, meanwhile, increased 16% year-on-year due to a successful bid season.

"With two thirds of our earnings generated outside of the UK this geographic diversity, combined with a focus on operational excellence and the deployment of technology, continues to deliver good growth, a strong cash flow and opens new market opportunities," said chief executive Dean Finch.

"We will stick to our fundamental principles of safe and punctual operations at affordable prices with particular emphasis on controlling costs to generate cash and keep fares low."

Meanwhile, despite subdued demand in the domestic market, the company said its UK bus and coach businesses were proving resilient. In the year-to-date, commercial revenue in the UK bus division was up 2%, while the UK coach division saw core revenue rise by 1.7%.

"The combination of our relatively resilient UK performance together with the strong growth we are seeing from our international operations enables us to selectively invest in growth opportunities," Finch added.

However, the group added it has pulled out of a major contract in Germany due to delays following a challenge by the incumbent operator.

Due to Deutsche Bahn's objection, the introduction of new trains that were pivotal to its successful bid to run the Nuremberg S-Bahn would suffer severe delays and have led to prohibitive costs.

"We have informed BEG that it is no longer in the interest of National Express and our shareholders to proceed and the authority understands and respects our decision," Finch explained, adding the company intended to bid for more German contracts.