A year ago, National Express was veering off the rails under the dual influence of a £978m debt pile pile and the loss-making East Coast rail franchise. Now, with new chief executive Dean Finch at the helm and a £360m equity call under its bonnet - as well as two bond issues and a strategic review - it's on track to restart dividend payments by the year-end.
Underlying pre-tax profit rose 36 per cent in the period to £75.7m - 15 per cent ahead of brokers' consensus expectations. Roughly half of that improvement is down to shedding the millstone of the East Coast line, which the group handed back to the Department for Transport last November. But cost-cutting has also boosted margins in most of the other businesses, particularly US yellow school buses and the Spanish operations. The only exception was UK Coach, where National Express has invested in new routes, a new coach station in Birmingham and more marketing.
The group's net debt remains hefty at £601m - over six times normalised operating profits - but after a year of balance sheet reform, at least this is now a longer-term headache, rather than an immediate one. KBC Peel Hunt expects full-year adjusted pre-tax profits of £148m and EPS of 22.1p (2009: £116m/30.4p).
NATIONAL EXPRESS (NEX) | ||||
|---|---|---|---|---|
| ORD PRICE: | 239p | MARKET VALUE: | £ 1.22bn | |
| TOUCH: | 239-240p | 12-MONTH HIGH: | 259p | LOW: 156p |
| DIVIDEND YIELD: | nil | PE RATIO: | NA | |
| NET ASSET VALUE: | 158p* | NET DEBT: | 74% | |
| Half-year to 30 Jun | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Net div per share (p) |
|---|---|---|---|---|
| 2009 | 1.42 | -48.1 | -14.4 | nil |
| 2010 | 1.06 | 24.5 | 3.80 | nil |
| % change | -26 | - | - | - |
*Included intangible assets of £1.27bn or 249p per share | ||||
