National’s profits boost in battle with rebel shareholder

The bus, coach and rail operator said the performance for the three months to March 31, which included a 5 per cent rise in revenues, supported its current strategy in the face of a campaign by Elliott Advisors for radical change. The matter will come to a head on Tuesday when the American hedge fund, which owns around 17.5 per cent of National Express, will ask fellow shareholders to back the election of three new non-executive directors.

It believes the appointments will re-invigorate the board while it attempts to garner support for a shift in the company’s strategy. Possible options could see the bus and coach operator tie up with another UK rival such as Stagecoach, refocus on the United States or sell-off part of the business.

However, chief executive Dean Finch said the update demonstrated the group’s strategy was “sound and will deliver significant shareholder value over the long term”. John Lawson, an analyst at Investec Securities, added the statement “reads like a defence document against unwelcome activism by at least one major shareholder”.

National said its own search for new blood for the board was progressing well, in a move it hopes will persuade shareholders not to back Elliott’s proposals.

In the update, National said its coach business reported a 3 per cent increase in sales, including 6 per cent growth in its core express network.

The company added that trading over Easter had been good and that the outlook for the rest of the year looked encouraging.

Mr Finch added: “National Express has delivered a strong first quarter with improving revenues growth and a significant increase in profitability that builds on the foundations for success we laid in 2010.”

National recently announced a 38 per cent jump in full-year profits.