National Express benefits from the switch to public transport

The group expects to report revenues growth at its rail, coach and bus divisions in 2011 as higher petrol prices forced people from their cars onto public transport.

National Express, which operates coach services in Yorkshire, said it was in line to meet full-year profit expectations as rail revenues are expected to have grown 6 per cent this year, bus revenues are forecast to be 4 per cent higher and coach revenues ahead 5 per cent.

The update came as the Association of Train Operating Companies (Atoc) revealed prices would increase at an average of 5.9 per cent this January, following an average 6.2 per cent increase at the start of this year.

Elsewhere, National Express’s coach and bus divisions came under pressure from a Competition Commission report, which called for reforms to make it easier for new entrants to gain a foothold and prevent existing operators from undermining rivals.

Dean Finch, National Express chief executive, said: “National Express is finishing 2011 in excellent shape.

“We are growing revenue and profit in all five of our divisions. We continue to invest in new fleet and offer exceptional value to our customers, enhancing the quality of our services at prices our passengers can afford.

“As recent passenger growth has shown, our customers value our competitive pricing during this period of economic uncertainty.

“This strong foundation, coupled with a clear cost focus and the operational flexibility of our business, leaves us well positioned to pursue new opportunities to deliver value to shareholders in the future.”

National Express said profit margins in its bus division, which operates in the West Midlands and Dundee, have climbed back to above average levels for the industry, while passenger numbers returned to growth in the West Midlands. The group also added 250 new buses to its fleet. The coach division has seen revenues driven by an increase in airport, long-haul and London services, National Express added.

Andrew Cleaves, managing director of National Express, UK Coach, said: “Yorkshire is an important market for National Express and we have recently invested £1.5m in a brand new service to further improve transport links.

“The new service provides a great commuter option between Leeds, Bradford and Manchester as well as business links connecting to Manchester Airport and Liverpool John Lennon Airport.

“We will continue to invest in the coach fleet and offer exceptional value to our customers, enhancing the quality of our services at prices our passengers can afford.

“As recent passenger growth has shown, our customers value our competitive pricing during this period of economic uncertain-ty.”

National Express, which runs the c2c and East Anglia rail services between London and Essex, will increase fares this January. Regulated fares, which include season tickets, had been due to rise by an average of 8 per cent in January – 3 per cent above July’s RPI inflation figure – but Chancellor George Osborne lowered this to July’s RPI plus 1 per cent.

Train operators increased fares by an average of 6.2 per cent in January this year but National Express said passenger volume growth remained strong as the cost of filling up a car increases.

Analysts at Charles Stanley Securities said it had been a good year for National Express, adding that the UK bus division in particular looks to have finished the period strongly.

They added in a statement: “But the share price already reflects that good performance, and indeed suggests further margin improvement to an extent that we think is unlikely.”

National Express, which also operates in Morocco, Spain and the US, is forecast to report a 12 per cent rise in pre-tax profits to £180.5m in the year to December 31 on revenues up 3 per cent to £2.2bn. It publishes its results in March.

In a statement, National Express said: “Flexibility in our networks and fleet operations, a focus on optimising costs and selective investment in new services and growth opportunities combine with secure, long-term funding and cash liquidity to create a resilient, highly effective public transport business.

“Our strategy ensures that we are well positioned to deliver significant earnings growth in our non-rail businesses in 2012.”

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