Stagecoach profits surge 80% on taxpayer support for bus services and post-lockdown public transport revival
- Stagecoach reported earnings of £19.3m for the six months ending 29 October
- Payments from the Bus Recovery Grant boosted the firm’s regional bus division
- The company’s performance came against a backdrop of labour shortages
Stagecoach’s interim profits have climbed by 80 per cent after the relaxation of pandemic restrictions led to a continued recovery in bus travel across the UK.
Britain’s largest coach operator reported earnings of £19.3million for the six months ending 29 October, against £10.7million the previous year when fewer people were travelling on public transport.
Its regional bus business was the only division to delier an operating profit, buoyed by £45.9million of payments from the UK Government’s Bus Recovery Grant to protect local services.
Profitability: Stagecoach, Britain’s largest coach operator, reported earnings of £19.3million for the six months ending 29 October, against £10.7million the previous year
The segment also saw the strongest growth in revenues, which increased by 15.9 per cent to £508.1million thanks to a fast recovery in fare-paying passengers and work during the Commonwealth Games in Birmingham.
Concessionary sales have not rebounded as quickly but were still higher than last year following the enormous popularity of an under-22 free bus travel scheme in Scotland introduced in January.
Stagecoach achieved this result despite extensive labour shortages in the transport sector causing some upward pressure on wages and service cancellations.
However, its London bus arm experienced a more damaging impact from staff shortfalls, swinging to a £1.6million operating loss after a reduction in service levels led to lost income and significant penalties.
Under Stagecoach’s contract with Transport for London, it is required to run certain services and not unilaterally scale them back.
This division still achieved a healthy rise in sales, although this was overwhelmingly related to the enlargement of operations resulting from the acquisition of Kelsian Group and HCT Group.
The Scottish firm forecasts a further uplift in profitability and like-for-like turnover during the latter half of the financial year as it gains from delayed inflationary increases in contract revenues and an improvement in labour market problems.
Martin Griffiths, its chief executive, said: ‘We have made further progress as we rebuild from the pandemic, manage the immediate-term macroeconomic headwinds, and position our business to maximise the opportunities for growth as we transition to a net zero future.’
He added that the current challenging economic conditions would spur greater numbers of people to take fewer car trips and use public transport more regularly.
Stagecoach noted passenger journeys on regional buses are already back at about 80 per cent of pre-pandemic volumes, with recent commercial revenue just 8 per cent below 2019 levels.
Much of the financial strains facing British households stems from oil and gas prices skyrocketing in the past year due to the gradual loosening of travel restrictions and Russia’s full-scale invasion of Ukraine.
According to the RAC motoring organisation, an average litre of unleaded petrol now costs 158.9p, while those with diesel vehicles must now pay an average of 182.7p.