National Express posts record profit of £113m in first half of 2019
National Express has posted a 15.3 per cent rise in operating profit for the first half of this year to a record £113.1m thanks to growth in all of its divisions.
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The figures
Statutory profit before tax grew from £98.1m in the first half of 2018 to £113.1m in the same period this year.
The coach travel provider saw revenue growth in all of its core divisions to reach £1.34bn, 7.8 per cent up on last year.
Net debt soared however, rising £354.2m to £1.28bn on the cost of buying Silicon Valley shuttle service We Drive U.
Cash flow also rose £10.4m to £95.6m year on year.
Shareholders will see their interim dividend increase from 4.69p to 5.16p.
Why it’s interesting
National Express has enjoyed a recent growth spurt, acquiring four business – three of which were in the US – and Alsa.
Spanish subsidiary Alsa, grew by nearly 12 per cent to €442.1m (£394.2m). It is now the largest private transport operator in Morocco, which the company has identified as a market for growth
Its North American division grew by 8.2 per cent to $812.3m, while its UK sector grew by 4.2 per cent to £285.3m.
In Germany, where the company owns a rail division, revenue dipped slightly from €43.7m to €40.7m, which the company said was due to a change in accounting. On a like-for-like basis, revenue grew by 5.4 per cent.
In the US, it acquired a majority stake in Silicon Valley’s employee shuttle business, We Drive U, as well as two transit and charter operators.
It has also been growing on its home turf of the UK, where it won the majority of Birmingham City Council’s home-to-school contract.
National Express started the first of its three Rhine-Ruhr Express services in June, and it is already gearing up to start its next one in December and its final one in December 2020. By that point it will operate five German rail contracts.
Shares rose 2.7 per cent to 436p per share this morning.
What National Express said
Chief executive Dean Finch said: “I am delighted to report another record set of results, primarily driven by organic revenue, profit and margin growth in every division. Group free cash also grew strongly. We are currently trading ahead of expectations despite the impact of unprecedented bad weather in North America.
“Our disciplined diversification means we have a portfolio of businesses that enable global best-practice and efficiency to be shared, while allowing local growth opportunities to be pursued. Our strong cash generation continues to allow investment in new technology and strategic acquisitions to drive organic growth and new market expansion.
Read more: National Express increases shareholder dividend by 10 per cent
“The prospects for growth are strong. We continue to drive improvements in our core bus and coach businesses, add significant new contracts like Rabat and expand in newer markets such as Switzerland and US shuttle, through our recent WeDriveU acquisition.
“We retain a disciplined focus on growing shareholder returns. The Board has again demonstrated their confidence in our future growth with another 10% increase in the interim dividend. With many opportunities to pursue, we are confident of our future prospects.”