National Express gets speedier return from bus investment

Transport group National Express raised its profit hopes for the year yesterday after moves to revamp its bus network paid off earlier than expected.

The company, which also operates coach and rail services, said its business recovery plan would return its UK bus service to industry-average profit margins ahead of schedule.

The restructuring involved cutting back on quieter routes while adding to busier runs, and improving revenues by increasing the fare for a multi-trip travelcard while holding the single-journey fare.

National Express added it had seen revenue growth in all its UK divisions, as well as in its Spanish and North American coach businesses.

In a statement ahead of its full year results, the company said: "The board now expects normalised profit before tax for 2010 to be a little above current market expectations and markedly stronger than was expected back in January 2010."

National Express launched the recovery plan for its bus service in June. The company said the results so far had enabled it to launch a five-year investment plan to improve the fleet.

In the West Midlands, its key market in the bus division, underlying revenues growth was 1.5 per cent higher since July.

The group's coach division saw revenues growth of 3 per cent in the year to date, the company said, while its airports business renewed its contract with BAA to operate Heathrow Central bus station.

The end of the current government-funded senior citizen concessionary fare scheme in October 2011 is not expected to hit the coach business, the company added.

Its UK rail business saw underlying revenues growth 7 per cent higher in the fourth quarter.

Dean Finch, chief executive of National Express, said the year had shown "tremendous progress" for the group.

He said: "We will complete our business recovery programme ahead of schedule, and will look to grow our bus, coach and rail portfolio, leveraging our international presence, and delivering value for customers, stakeholders and investors alike."

In Spain, the group's Alsa coach business withstood austerity measures and returned to underlying revenue growth for the first time since 2008.

After launching 1,600 new routes, the North American business saw underlying revenues grow 6 per cent year-on-year since September. The company expects operating profits to be 50 per cent up on last year.

Shares in the group moved 3 per cent higher after the upbeat report.