Bus and train operator National Express (NEX) fleshed out much of its first-half performance just three weeks ago, but better-than-expected profits have fired up the shares. Strip out the contribution from the rail business - shrivelled by the loss of its East Anglia franchise last year - and underlying operating profit rose 3 per cent to a record £92.4m, despite higher costs and ongoing weakness in Spain. Crucially, passenger demand is either stable or improving and management is confident on hitting full-year estimates.
Exclude the customary one-off charges and group underlying operating profit fell 8 per cent to £97.2m. Clearly, a 44 per cent slump in rail revenue and two-thirds plunge in profits hurt. However, the remaining c2c franchise, which runs for at least another year, is doing well, and there has been progress elsewhere. Cost-cutting and the purchase of Petermann last year offset higher fuel costs at the North American school bus division, driving profits up 13 per cent to £41.6m. Passenger growth and lower costs beefed up profits at the UK coach business, too, and a turnaround at the UK bus operation, besieged by government subsidy cuts and a rising fuel bill, began in the second quarter. And in Spain, a €2.2m (£1.9m) drop in profit is considered a good result.
Broker Oriel Securities expects full-year adjusted pre-tax profit of £138m, giving adjusted EPS of 20.9p (from £164m and 25.5p in 2012).
NATIONAL EXPRESS (NEX) | ||||
|---|---|---|---|---|
| ORD PRICE: | 260p | MARKET VALUE: | £1.33bn | |
| TOUCH: | 260-261p | 12-MONTH HIGH: | 261p | Low: 163p |
| DIVIDEND YIELD: | 3.8% | PE RATIO: | 23 | |
| NET ASSET VALUE: | 188p* | NET DEBT: | 83% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 934 | 39.8 | 6.20 | 3.15 |
| 2013 | 957 | 34.3 | 5.50 | 3.25 |
| % change | +2 | -14 | -11 | +3 |
Ex-div: 4 Sep Payment: 20 Sep *Includes intangible assets of £1.3bn, or 255p a share | ||||
