Stagecoach tells of rocky road ahead following EU vote

Chief executive Martin Griffiths said the firm is following developments closely, adding: “Although we have little business in Europe outside the UK, we acknowledge the referendum result may lead to continuing economic, consumer and political uncertainty.​

“Like other business sectors, we are affected by reduced public spending and factors in the wider economy, such as weakening consumer confidence and slowing growth in both UK GDP and real earnings.”

The firm operates the mainline between Yorkshire​, London and Scotland and runs buses and trams across Yorkshire.

Mr Griffiths made the statement alongside Stagecoach’s full year results, which saw revenues rise 20 per cent to £3.8bn and pre-tax profit nudge up 1 per cent to £187.4m.

The firm also flagged the sale of its European megabus arm to German company Flixbus. The sale only includes the retail operations, such as timetabling, marketing and ticket sales.

Analysts at Jefferies said in a note: “Despite the sale of loss-making megabus Europe, which lost £24m in 2016 and we had it losing £15m in our 2017 outlook, the guide of no significant change to expected full year adjusted earnings per share must require expectations across the rest of the group to fall to offset the benefit of removed losses.

“The group looks to be steering North America and UK Rail lower – and given the large East Coast contract sits in that rail unit, we believe that will be a focus for market concern.”

They added that modest underlying revenue growth is expected in UK local bus activities and Stagecoach is aiming for 7 per cent margin in London Bus while megabus.com revenue trends are not yet improving in the US, leading the group to revise its 2017 profit expectations for its North America unit.