National Express on track to meet full-year profit forecasts

National Express said on Tuesday it was trading in line with expectations in the first quarter after securing two major rail contracts and launching new services in the UK and Germany.

In the year-to-date, the UK-based coach transport company won contracts with German Rail and North American Transit.

In April, National Express launched city2city, its German coach network which sold out 10,000 introductory tickets priced at €5.0.

The UK Coach arm was selected to run services between London Luton Airport and London Victoria from May.

Revenue was broadly flat in the business with a 1.0% increase as a 7.0% rise in passenger volume was offset by a 10% decline in concession revenue.

The firm's UK Bus division saw a 3.0% like-for-like jump in commercial revenue, driven by student travelcard sales and the launch of a commercial smartcard scheme in Dundee. However, poor weather affected overall passenger volume, especially in concessionary travel, and profit was constrained by last year's reduction in the Bus Service Operators Grant duty rebate.

International business, National Express Transit, entered the California market and reported an annual revenue growth of $75m.

The group also achieved a steady performance in Spain, despite the backdrop of austerity in the recession-hit nation. Urban Bus in Spain increased like-for-like revenue by 5.0%.

The c2c division maintained its position as the best performing UK rail franchise, supporting revenue growth and profitability with a public performance measure of 97.5%.

Following the acquisition of two regional rail contracts in German region North Rhine-Westphalia, which is expected to generate revenues of around €1.6bn over 15 years, the company has commenced the mobilisation phase ahead of start-up in December 2015.

National Express is also progressing a pipeline of new regional rail opportunities totalling €900m of annual revenue.

"We have made a positive start to the year, continuing to deliver a high level of value and service to our customers and building our new business pipeline through regular contract wins," said Chief Executive Dean Finch.

"Our focus on driving up returns on capital, strong cash generation, organic growth and leveraging our international transport skills to deliver new opportunities is proving to be successful."

The company ended the first quarter with capital expenditure of more than £40m, due to core fleet investment across the business. Full-year capital investment is anticipated to total £100m.

National Express is on track to deliver its profit expectations for 2013 as it secures new contracts and launches new services, the group concluded.

RD