Bus and train operator Stagecoach reported an 18% drop in half year pre-tax profit after a weak performance at its UK rail division.
The FTSE 250 transport company said pre-tax profit fell to £88.7m for the six months ended 31 October 2011 from £108.7m the year before. Revenue for the period rose to £1.29bn from £1.13bn previously.
Results were hit by a poor performance at its UK Rail division. The unit posted an operating loss of £6.9m compared to a profit of £22.9m last year.
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Losses were made at East Midlands Trains, Stagecoach explained.
On a brighter note, Stagecoach said it has made a good start to the second half of the financial year and is currently trading remains in line with management expectations.
"We believe the outlook for the group is positive and our bus and rail services are well placed to benefit from the continuing consumer focus on service and value," the group said in a company statement.
Commenting on the results, chief executive Brian Souter added, "We have achieved further revenue growth across our bus and train businesses in the UK and North America. Against a background of pressure on household incomes and rising fuel costs, we believe that providing value for money travel is increasingly important. We are seeing continuing indications of modal shift from the car to bus and rail."
An interim dividend of 2.4p has been recommended, up 9.1% from last time.
Stagecoach also announced it has spent £44m on over 100 new coaches as it further expands its megabus.com budget coach service in North America and the UK.
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