Go-Ahead expects 'challenging' second half for rail unit

Revenue rose 8.1 per cent to 1,296.6m pounds in the six months ended December 29th compared to the same period in 2012 at FTSE 250-listed bus and train operator Go-Ahead, with both the Bus and Rail divisions showing growth.

Revenue rose 8.1 per cent to 1,296.6m pounds in the six months ended December 29th compared to the same period in 2012 at FTSE 250-listed bus and train operator Go-Ahead, with both the Bus and Rail divisions showing growth.

However, pre-tax profit contracted 1.8% to £43.2m over the corresponding time frames. Operating profit fell 1.0% to £51.2m, while the operating profit margin slipped from 4.3% to 3.9%.

While profits in Rail remained weak, the company managed to grow its bottom line in the Bus division with operating profit rising by 5.4% to £37.1m in spite of "significant" fuel cost headwinds. It expects Bus to contribute a greater proportion of earnings for the full year.

The company maintained its half-year dividend at 25.5p.

David Brown, Group Chief Executive of Go-Ahead, commented: "I am pleased to report a good set of results for the first half of the financial year. Our focus on running high quality, convenient services and our industry leading marketing strategy have continued to attract more passengers on to our value for money services.

He concluded: "These good results underpin my confidence in our ability to achieve our target of £100m Bus operating profit by 2015/16."

Full-year outlookWhile the company said that full-year results would be broadly in line with current forecasts, operating profits at the Bus division are expected to be "slightly higher than management's previous expectations" while Rail profits will be "slightly below".

Go-Ahead said that the second half of the year is expected to remain "challenging" for the Rail division, mainly due to weakness to the Southern franchise, one of its three rail franchises.

"There has been weakness across the network and we are working closely with Network Rail to help improve performance. We expect the franchise to remain profitable this financial year and a cost efficiency programme has been introduced in preparation for entering revenue support in September 2013."

MF

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