Stagecoach 'firmly returns to growth' as passengers get back on board but dividend on hold

Stagecoach, the Scottish transport giant, has “firmly returned to growth” after reporting a hike in full-year numbers but warned it is not immune from economic headwinds.

The Perth-headquartered group reported revenues of just over £1.17 billion for the year to the end of April, up from £928.2 million in the prior 12-month period. Adjusted operating profits rose to £72.7m, from £48.1m in 2021.

The firm said the profit growth reflected an “encouraging” recovery in passenger volumes and payments from governments to ensure continuation of public transport services amid the ongoing effects of the pandemic.

Passenger journeys and commercial sales are now at around 81 per cent and 91 per cent respectively of equivalent 2019 pre-pandemic levels.

Stagecoach recently accepted a £595m takeover offer from German asset manager DWS Infrastructure. The transport group’s board backed the move in favour of a rival merger deal from coach operator National Express.

Stagecoach chief executive Martin Griffiths said: “I am pleased to report that we have firmly returned to growth in the full year. We are in a good financial position, supported by recovering customer demand and continued investment grade credit ratings, as we look to the next phase of our journey under new ownership.

“We are not immune from the global macro-economic headwinds. However, we believe our good value public transport services offer consumers help in managing the cost-of-living challenges and high fuel and energy prices, supporting our ambitions around modal shift from car to bus. In addition, we are making good progress with the delivery of our sustainability strategy and our transition plans, including introducing fleets of new zero emission buses.”

He added: “Looking ahead, public transport remains critical to economic recovery, healthy and connected communities, levelling up the country, and delivering a net zero future, and I am confident Stagecoach has positive long-term prospects.”

Perth-headquartered Stagecoach has grown over the past 40-odd years to become one of the biggest bus operators in the UK.

The group pointed to positive underlying cash generation and a reduction in net debt from £312.6m to £224.3m during the period. Net debt plus net train operating company liabilities fell £136.5m, from £401m to £264.5m.

On the dividend front, the firm told investors: “We are pleased at the progress of the business as the country recovers from the pandemic and remain positive on the longer-term prospects for the business.

“Nevertheless, the board did not believe it was appropriate to resume dividend payments in respect of the year ended April 30, 2022. We will keep our dividend policy under review.”

Stagecoach has grown to become one of the biggest operators of bus routes across the UK, having started out with a skeleton service in 1980.

Last month the company agreed a £20m deal to buy Kelsian Group’s east London bus operations, which run a fleet of 150 vehicles.

The group said it had “entered into binding agreements” to purchase the operations, which also include a depot at Lea Interchange, for an initial £10m followed by £1m each year for ten years after the move is completed.

Kelsian’s east London operation operates 11 contracts on behalf of Transport for London (TfL).