- Ticket sales and revenue plummet because of UK and European lockdowns
- Net debt has more than doubled since the February year-end
Trainline (TRN) management said it was confident it would be able keep the business on track in an “extended downturn”, given its liquidity and ability to scale back operations. Yet net debt has more than doubled since February and its pitch that more travellers would use its services to avoid ticket machines has largely gone untested, given the low level of train use in the six months to 31 August.
The new lockdown measures and earlier tiered restrictions make its second half outlook even more dire. Chief executive Clare Gilmartin said Trainline was still placed well to “recover quickly” when lockdowns are eased. In the second quarter – from June to August – people started travelling again around the UK and Europe, although Trainline still saw a 70 per cent year-on-year drop in net sales. The decline was less steep in its international division, which suffered a 55 per cent-drop in net ticket sales. Total net ticket sales for the half were down 81 per cent on last year, at £358m. This translated to revenue of £31m and an adjusted cash loss of £16m.
Net debt increased from £71m at the February year-end to £166m. Trainline said that this was largely down to a working capital outflow, which it believes should reverse as the business recovers. The company’s debt covenant – which stipulates that net debt not exceed 3.75 times adjusted cash profits – was waived this year but will be tested next year. Trainline has set a base case assumption that revenue will return to pre-pandemic levels by June 2021, although warns further Covid-19 restrictions would make this difficult to hit.
Consensus estimates see a full year loss per share of 10.6p, recovering to earnings per share of 4.1p in 2022.
Trainline is reliant on people moving around in great numbers, and its selling point of allowing people to avoid public ticket machines has gotten stronger through Covid-19. Yet this USP becomes lost when you consider this is also available direct from many train operators. Sell.
| TRAINLINE (TRN) | ||||
| ORD PRICE: | 287p | MARKET VALUE: | £ 1.38bn | |
| TOUCH: | 287-287.4p | 12-MONTH HIGH: | 560p | LOW: 187p |
| DIVIDEND YIELD: | NIL | PE RATIO: | NA | |
| NET ASSET VALUE: | 70p* | NET DEBT: | 49% | |
| Half-year to 31 Aug | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2019 | 129 | -87.5 | -20.3 | nil |
| 2020 | 31.0 | -44.7 | -8.1 | nil |
| % change | -76 | - | - | - |
| Ex-div: | na | |||
| Payment: | na | |||
| *Includes intangibles of £536m, or 111p per share | ||||
Last IC View: Sell, 381p, 02 Sep 2020
