Stagecoach profits plunge 91 per cent on lockdown restrictions
Bus operator Stagecoach has taken a significant hit to its first-half profits as the pandemic continues to restrict its regional bus services.
The company’s profits fell to £5.4m in the six months to 31 October compared to £65.9m in the same period last year.
This came after revenue from £800.2m to £454.6m in the first half of this year, in large part due to the essential closure of regional bus and tram services. It also took a hit from the end of the East Midlands Trains franchise.
“We anticipate that it will take some time for demand for our regional bus services to return to pre-Covid levels, with lockdowns impacting on the speed of that recovery,” chief executive Martin Griffiths said.
The use of public transport has plummeted this year as employees were encouraged to work from home. And the FTSE firm said there is a risk that the acceleration of remote working could contribute to a “longer term adverse effect on the group’s revenue”.
Despite a disappointing set of results there are some encouraging signs of recovery.
There has been “significant recovery” in patronage and commercial revenue in its regional bus division since May. Stagecoach is currently operating around 91 per cent of prior year vehicle mileage.
Commercial sales have also recovered to almost 60 per cent of prior year levels, now at around 54 per cent.
And encouragingly Stagecoach grew the profitability of its London bus business reporting operating profit of £9.2m, compared to £5.1m in the previous year.
Stagecoach said that “given the continuing uncertainties” it is not planning to pay out an interim dividend.
“We recognise the importance of dividends to many shareholders and it is our ambition to resume dividend payments in due course when supported by appropriate profit and cash flow generation, relative to our net debt and pension liabilities,” it added.
“Overall, while it is difficult to predict the precise pace and timing of recovery over coming months, we continue to see a positive long-term future for the Group,” said Griffiths.