Bus and train group National Express cheered investors with news of cost savings and an increased total dividend for the full year ended December 31st.
The group said trading was "robust" during a period of challenge, but admitted it had been unable to overcome the huge decline in passenger numbers seen as a result of the government removing its concessionary scheme on the company's UK coach business.
The 1.0m passenger reduction drove the year-on-year decline in group operating profit, which fell from £225.2m to £211.9m.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Revenue for the year totalled £1,831.2m, down from £2,238m the previous year.
Pre-tax profit declined from £180.2m to £164.1m, with earnings per share dropping to 25.5p from 27p a year earlier.
The dividend for the year was increased to 9.75p (2011: 9.50p).
Dean Finch, the Chief Executive of National Express, said: "I am very pleased with the progress that National Express Group as a whole has made, with four of our five divisions performing strongly. Our most significant challenge was the decline in National Express Coach's elderly and disabled passengers by one million after the UK Government's removal of its coach concession scheme.
"This made 2012 one of the most difficult years in National Express Coach's 40 year history and has driven the decline in National Express Group operating profit. However, our recent contract wins in Spain and North America and selection by German authorities to run two rail contracts are an indication of the international strength of our business, something we are determined to build on in 2013."
Looking ahead, the group added: "We are optimistic about our future prospects. We expect to deliver organic growth in four of our divisions as our combination of value for money fares and operational excellence provides a compelling passenger offer in austere times. Strong cash generation and prudent management of our debt will provide flexibility in the future."
Divsionally, UK Bus revenue rose 2.0%, profit climbed 4.0%, and margins rose 30 basis points. Rail delivered a strong year, boosted by the performance at c2c. Revenue fell to £195.1m (2011 £688.3m) as a result of the end of the NXEA franchise in February. Operating profit was £26.7m (2011 £43.4m). The c2c franchise grew both passenger volume and yield in 2012. It carried over 2 million passengers as part of the successful delivery of travel during the London Olympics.
Coach suffered a "difficult" year, with revenue decreasing to £255.1m, a 2.0% decline from £259.1m in 2011. Within this, the Express coach business declined 7.0%, driven by a 40% decline in revenue from its over-60 customers. Apart from these concession passengers, commercial revenue in the Express business grew by 2.0%, with increased volumes across each of its market segments, alongside good growth in the Kings Ferry and Eurolines operations.
Geographically, North America revenue grew by 19% overall, through organic growth, a strong bid season with 97% contract retention and 26 new contract wins, and the successful acquisition and integration of the Petermann school bus business. Operating profit grew by 22% to $94m, including the delivery of in-year synergies of $7.0m from Petermann and a first contribution from its Transit division.
In Spain, ALSA's performance was described as "resilient in the face of a difficult year", growing revenue by 4.0% (in local currency) and holding profit almost flat at €103.3m.
The share price rose 3.48% to 202.10p by 09:00 Thursday.
10 vinyl records worth up to £10,000 - is one in your collection?
News Vinyl is experiencing a resurgence and collectors will pay up to £10,000 for some albums - is it time to dust off your old records?
By Marc Shoffman Published
FCA: Banks are still short-changing savers
The latest FCA review finds that while public shaming has encouraged providers into offering better deals on savings, many of those with closed accounts are still being shortchanged.
By John Fitzsimons Published