Acquisitions beckon, say analysts as Stagecoach reports sales boost

RAIL and bus firm Stagecoach posted strong sales gains across its UK and US divisions and highlighted its strong finances, which analysts believe could mean acquisitions are imminent.

The group, which runs bus services at cities across the region including Hull, Sheffield and Doncaster, said it has performed well since the end of April and is on track to meet profit expectations for the year.

Stagecoach said excluding its Sheffield tram business, like-for-like sales at its UK rail business were up seven per cent over the 12 weeks to the end of July. It also operates East Midland Trains, running high-speed services from London St Pancras to Sheffield, Derby and Nottingham.

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The group also co-owns Virgin Rail Group, which runs the West Coast inter-city franchise, where it saw sales soar 18.7 per cent over the period. Its UK bus division reported a two per cent sales increase and its North American arm grew sales by 6.9 per cent.

Stagecoach, which last year failed in an attempt to buy rival National Express Group, said in it had significant undrawn bank facilities.

National Express, which used to run the East Coast mainline, walked away from talks over a takeover by Stagecoach last October, opting instead to raise cash itself.

Since then, Europe's biggest transport group Deutsche Bahn has sealed a takeover of British operator Arriva, and predicted a Europe-wide transport sector consolidation wave as companies look to take advantage of a more liberalised transport market.

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Stagecoach added the outlook for its businesses was positive despite uncertainty following the change in the UK Government and the sustainability of the pace of economic recovery.

"Stagecoach is one of the first players in the sector to realise a bounceback from the recession," said KBC Peel Hunt analyst Paul Hickman.

"For us the real attraction of the shares is the acquisition potential of the strong balance sheet with 340m unutilised facilities."

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