A step-change in the performance of its North America division helped public transport provider Stagecoach to post an increase in full-year profits.
The Perth headquartered firm saw revenues climb by £125.2 million to £2.93 billion in the year to April 30, with pre-tax profits coming in £3.7m ahead at £158m.
The preliminary results were in line with expectations and led the board to propose a final payment of 6.6p per share, taking the full-year dividend 10.5% ahead of 2013 to 9.5p.
Chief executive Martin Griffiths said the firm was on a strong financial footing and he was confident that “new ideas and new opportunities ahead” would deliver further sustainable growth for the business going forward.
“We have met our expectations for the year,” Mr Griffiths said.
“Across the group, we have a strong set of locally managed businesses which are improving services for our customers, supporting the economy and communities and adding value for our investors.”
The firm’s regional UK Bus operation saw revenues pass through the £1bn barrier with a 4.8% rise in turnover compared with 2013.
The division saw like-for-like passenger volume growth of 1.3% for the year while operating profits came in £4.2m ahead at £147.4m.
The division also delivered the group’s overall strongest operating margin during the year of 14.6%
Stagecoach’s UK rail arm was the company’s biggest revenue contributor with sales of £1.25bn during the past 12 months, producing an operating profit of £34.3m at the group’s slimmest margin of 2.7%.
The figure was 16.7% down on £41.2m return from 2013 but Stagecoach said the outcome was in line with its expectations.
The division operates the South West Trains and East Midlands franchises which are due to come to an end in 2017 and 2015 respectively and Stagecoach said it remained in discussions with the Department for Transport (DfT) over renewal terms.
The firm said it was disappointed to lose out on the Thameslink franchise but remains in the running to operate the Docklands Light Railway in London and has submitted a bid to operate the east coast main line with Virgin, the group with which it runs the west coast main line as a joint venture.
That business saw revenues increase by 5.5% to £465.6m last year but profits fell by 75.9% to £2m as margins were squeezed to 0.6%.
The firm said the operation had the potential to deliver higher levels of profitability in the current year after it reached agreement with DfT to continue operating the line through to March 2017 at the earliest.
However, the main driver of profit growth for the year was the North American bus operation which saw revenues increase by 6.9% to $685.7m and operating profits climb by 80.1% to $38m.
The vast majority of the growth was delivered by the maturing into profit of Megabus routes established over the past three years.
Stagecoach said it would continue to expand its Megabus operaton in the US it launched a new Florida hub last month but said it did not expect that operating profits would grow at the same level this year.
Finance director Ross Paterson said: “The market is still expecting further profit growth in North America over the year ahead but nothing to the extent of the 80% of last year as we invest in new services.”
While positive on the whole in the US, the firm continues to face an anti-competition lawsuit over the formation of its Twin America New York sightseeing joint venture in 2009.
The firm, which saw pre-tax profits more than halve to $8.8m in the last year, recently agreed without admitting any liability a $19m cash settlement to resolve a litigation case with private defendants.
A separate action with the US Department of Justice and New York Attorney General office remains to be resolved.
Stagecoach founder and chairman Sir Brian Souter said the company was pleased that progress on the issue was being made and said the group had delivered on its financial expectations for the year and was looking forward wth confidence.
“Stagecoach has made a satisfactory start to trading in the financial year ending April 30, 2015,” Sir Brian said.
“The group is in a strong financial position, with investment grade credit ratings, and I believe the prospects for our customers, employees and shareholders are positive.”
Shares in the group closed the day unchanged at 377.5p.
business@thecourier.co.uk