Railway revenues putting Stagecoach on the right track

The Perth-based company, which operates South West Trains and East Midlands Trains, said overall profitability remained on track despite the "unusually severe" winter weather that hit revenues for December and January.

Stagecoach said like-for-like revenues for its rail division – excluding its tram operations – were up 2.1 per cent in the 40 weeks to February 7, an improvement on the 1.9 per cent reported for the six months to October.

But the bus division – which operates in more than 100 towns and cities across the UK, from northern Scotland to the South West – saw comparable revenues slow to 3.4 per cent in recent trading, from 4.4 per cent in the half year.

A spokesman for Stagecoach said that the bus arm had been the main victim of the freezing winter weather as consumers cut down on travel in the cold snap. But the rail division had seen better trading as the economy got "slightly better" and the financial services sector began to recover.

"(Stagecoach) runs South West Trains which is a big commuter service so it is closely linked to the economy," the spokesman said. Recent official figures showed the UK climbed out of the longest and deepest recession on record in the final three months of last year.

Meanwhile, the firm's North American business improved to a 5.2 per cent year-on-year fall in revenues, from a 6.5 per cent decline for the first half.

The US business has been hit by high unemployment as passengers cut back on discretionary leisure travel while results have also suffered on the weakness of the pound.

Stagecoach, which reorganised its debts at the end of last year, said the group's financial position remains strong.

"Notwithstanding the continued, uncertain economic outlook in the countries in which the group operates, overall current trading remains in line with our expectations and we believe the prospects for the group remain positive," the firm said.