National Express owner Mobico has hit the brakes – so what’s going on with its share price?
Mobico Group had a torrid Thursday languishing at the bottom of the FTSE 250 index, after a bleak third quarter trading update sent shares spiralling nearly 30 per cent.
The coach company announced that morning it had suspended its dividend and appointed advisers to explore the sale of its North American school bus division in 2024.
Formerly known as National Express, the group re-named itself earlier this year in a bid to make its brand more international.
It has also announced a number of changes to its senior leadership team, bringing in Alex Jensen as CEO of it UK arm and Tim Wertner to lead its North American School bus business.
But the company just can’t seem to get the wheels moving and analysts are now speculating whether its focus on expansion into international markets may need a rethink.
Thursday’s update capped what has become a grim year for the firm, with shares down over 60 per cent and Mobico yet to recover from the pandemic amid a gloomy macroeconomic backdrop.
John Coldham, co-head of the retail and leisure sector at Gowling WLG, told City PM the road to recovery post-Covid had “been a difficult one… with inflation eating into the coach operator’s costs and weaker demand from consumers in some regions despite the easing of travel restrictions”.
But passenger volumes in its UK business are still yet to recover fully from pre-pandemic levels, while its soon-to-be-flogged-off North American segment has needed extra cash to address staff shortages.
“Areas of momentum such as its UK National Express and Spanish Alsa coach business are being countered by continued challenges for UK buses and its North American school bus business.”
Keith Bowman, investment analyst at interactive investors
“Areas of momentum such as its UK National Express and Spanish Alsa coach business are being countered by continued challenges for UK buses and its North American school bus business,” Keith Bowman, investment analyst at interactive investor, told City A.M.
Analyst consensus highlighting a ‘buy’ rating would now likely to “come under review,” he added, with the “group’s strategy to diversify internationally during recent years” also in question.
Its not all doom and gloom though. Gowling’s Coldham said shareholders would take “some relief at positive passenger volumes in Europe and the growth of its German subsidiary,” with new contracts on a number of rail lines.
Its Spanish long-haul business Alsa has also seen solid demand, with passenger volumes up 29 per cent.
“If the operator can manage its costs and continue growth in Europe during this difficult period, it should be able to get itself back on track having been well-established in the sector over the past few decades,” Coldham added.
Investors must still have many questions though, and Thursday’s update will have done little to ease their concerns.