Rising fuel price inflation, global austerity cuts and the loss of the East Anglia franchise weighed heavily on bus and train operator National Express (NEX) at the start of 2013. But the group has proved its doubters wrong, beating its free cash flow targets by £30m. As a result, net debt fell by £80m and remains on track to settle at a more affordable two times cash profits by the end of 2014.
The profit decline was the result of the lost rail franchise. As the only division not to report revenue growth during the year, rail continued to be the group's weak spot. By contrast, the UK coach business was the star performer, reporting a 30 per cent profit increase on 2012 (adjusting for the impact of the Summer Olympics). It managed to bounce back after taking a £16m hit when funding for the over-60s bus pas was cut this time last year.
The Spanish business staggered on, but saw operating profit fall 7 per cent as the local economy failed to pick up. Management said cost reductions and new contracts - such as Guadalajara and Tangiers in 2013 - could be enough to offset continuing Spanish headwinds over the coming year.
Broker Investec expects adjusted pre-tax profits of £148m this year, giving EPS of 22.2p (from 21.4p in 2013).
| NATIONAL EXPRESS (NEX) | ||||
|---|---|---|---|---|
| ORD PRICE: | 300p | MARKET VALUE: | £1.5bn | |
| TOUCH: | 299-300p | 12-MONTH HIGH: | 308p | LOW: 189p |
| DIVIDEND YIELD: | 3.3% | PE RATIO: | 27 | |
| NET ASSET VALUE: | 173p* | NET DEBT: | 83% | |
| Year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2009 | 2.71 | -83.5 | -17.6 | nil |
| 2010 | 2.13 | 40.2 | 12.0 | 6 |
| 2011 | 2.24 | 129 | 19.9 | 9.5 |
| 2012 | 1.83 | 69.8 | 11.8 | 9.75 |
| 2013 | 1.89 | 64.4 | 11.1 | 10 |
| % change | +3 | -8 | -6 | +3 |
Ex-div: 30 Apr Payment: 23 May *Includes £1.22bn of intangible assets, or 239p a share | ||||
