Growth in Arriva's bus and European divisions alongside cost-cutting failed to fully offset a slowdown in UK rail and increased fuel costs.
In UK Bus and Rail, which makes up more than half of Arriva's sales, the picture was very mixed. UK bus sales rose 4.2 per cent to £473m, with profits at the operating level up 3.7 per cent to £47.2m despite £9m in additional fuel costs. The company is still investing in the division, though, with a total of 453 new vehicles due to enter service by the year-end.
But UK rail is still Arriva's biggest headache, as slowing passenger growth saw sales fall 9 per cent to £376m and operating profits dip more than £4m to £10.4m. The Cross Country franchise generated passenger growth of just 1.8 per cent, well below the forecast of 10 per cent, and Arriva cannot count on government support for the franchise in the form of revenue protection before November 2011, either. Chief executive David Martin acknowledged the extent of the UK slowdown, but said that most of this was off-set by decent performance from its heavily subsidised European operations despite tough conditions in Spain.
JP Morgan forecasts full year pre-tax profits of £110m, giving EPS of 40p.
ARRIVA (ARI) | ||||
|---|---|---|---|---|
| ORD PRICE: | 493p | MARKET VALUE: | £982m | |
| TOUCH: | 495-498p | 12-MONTH HIGH: | 839p | LOW: 361p |
| DIVIDEND YIELD: | 4.9% | PE RATIO: | 10 | |
| NET ASSET VALUE: | 286p* | NET DEBT: | 138% | |
| Half-year to 30 Jun | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 1.44 | 66.3 | 23.8 | 6.15 |
| 2009 | 1.58 | 57.4 | 20.1 | 6.46 |
| % change | +10 | - | - | +5 |
Ex-div: 9 Sep Payment: 2 Oct *Includes intangible assets of of £529m or 266p a share | ||||
