Shares in Perth-based Stagecoach surged up 3.51% to 310p on Wednesday after the public transport operator posted full-year results ahead of market expectations.
Revenues climbed significantly from £2.59 billion to £2.8bn in the year to April 30 and pre-tax profits before exceptional items came in £16.4 million higher at £218.9m outstripping analyst expectations of a £210m return.
Total operating profit of £256.3m was also ahead of the general consensus of around £250m.
Earnings per share was up 18.9% to 30.2% in the period, while Stagecoach’s board signed off on a 10.3% uplift in the dividend to 8.6p.
Chief executive Martin Griffiths, who took over from founder Sir Brian Souter in May when he moved to become chairman, said the returns were a “good set of numbers.”
“In what is an uncertain world out there, many companies would be pleased with these results,” Mr Griffiths said.
The company’s four major divisions UK Bus regional, UK Bus London, North America and UK Rail all posted positive revenue growth figures for the year, with the bus operations across the Atlantic leading the way, with a 28.8% increase sales to £407.2m.
Regional UK bus and the rail arm saw revenues rise by 6.3% and 5.3% respectively, while the London operation saw the smallest rise, with a 1% uplift taking total sales to £232.7m in the period.
Mr Griffiths said the UK regional bus business which is closing in on annualised sales of £1bn had performed well despite increased fuel costs and a reduction in tendered and school revenues.
The division booked revenues of £18.8m and an operating profit of £4m in the year as a result of its high-profile involvement in providing transport services for athletes and the media at the London 2012 Olympics and Paralympics.
Overall operating margin dipped from 17.9% to 17.1% and Stagecoach said it would be working hard over the coming months to control costs in the business and deliver sufficient growth in commercial revenues to offset the Olympics impact.
The company said it had recently increased commercial bus fares by 3.5% which it expects will contribute to growth.
“We have a good formula,” Mr Griffiths said. “We invest the most and that leads to a company that gets most volume growth.
“Despite £25m in additional costs and a reduction in Fuel Duty Rebate Relief, we still saw expansion and margin of 17%.”
Although revenue growth was strong in the Stateside bus operations on the back of major expansion following a $134m deal last July to buy strategic assets of the defunct former Coach America operation, operating margins were significantly lower in 2013 at 3.3% than they were a year earlier at 6.3%. Operating profits also dropped by a third during the period from $31.4m to $21m.
Mr Griffiths said adding new hubs to the US Megabus portfolio had led to the squeeze on margins.
“The principal reason was around start-up costs for Megabus,” he said. “We have taken quite significant operating losses for California and Texas but where we are more established, we continue to do well.
“We have got to look at it as a year of transition where a lot of moving parts were added on.
“The plan for this year is to more than double operating profits out of the US business.”