Transport group Stagecoach says profits remain firmly on track despite the chaos caused by UK flooding and North America’s polar vortex.
A management statement for the 40-week period to February 2 said returns remained “satisfactory” despite the most inclement and disruptive of weather in its major markets this winter.
Year-to-date revenue growth climbed above 5% in its North American bus business where Megabus.com continues to pick up market traction and was approaching 6% in Stagecoach’s Virgin Rail joint venture.
Rail operations in other parts of the country saw 3.9% growth, with the UK bus business up 4.6% and the London division climbing by 3.1%.
The performance set stock climbing in early Wednesday trading before shares closed up 0.58% at 384.00.
“There has been no significant change to our expected adjusted earnings per share for the year ending April 30 2014, which given the effects of the severe weather in both the UK and North America reflects the strength in the underlying trading of the business,” Stagecoach said.
The company said an alliance between Network Rail and its South West Trains franchise has allowed an “integrated” response to flooding in the south west of England and provided the basis “for the parties to work together to enhance the future resilience of the infrastructure”.
It announced new coach-rail services to help passengers in the area.
Regional bus services, including Stagecoach East Scotland, had performed “well”, the company added, with passenger volume and revenue climbing year-on-year.
In the US, Megabus.com was once more the stand-out performer with a revenue hike of more than a fifth in the nine-month period. Sightseeing revenue from the Twin America brand reduced in the “increasingly competitive” New York market, while Stagecoach continues to discuss a monopolies lawsuit with the authorities.
Meanwhile, discussions continue with the Department for Transport over Virgin Rail taking a greater share of risks and revenues from its extended west coast mainline agreement.
Under the deal Virgin Rail, in which Stagecoach hold a 49% stake, is paid a fee equivalent to 1% of revenue to run the service until April 2017, with the DfT taking the risk over differing revenues and costs.
The agreement follows the DfT’s 2012 franchising fiasco, which initially awarded a contract to First Group before the discovery of massive failures in the tendering process.
Virgin Rail is now in negotiation over new terms which could see it take greater revenue and cost risk over the next three years, in exchange for a “commensurate” financial return.