A mix of bad weather and profit underperformance in Go-Ahead’s (GOG) regional bus division have prompted a reduction to the transport group’s full-year profit forecasts. Rail operating profits fell to £14.7m from £17.6m, after the group’s German rail operations were affected by contractual performance penalties, the late delivery of new rolling stock and a shortage of drivers.
While Go-Ahead achieved a 2.3 per cent revenue increase in regional buses, its costs are outpacing this growth and eating into margins. Go-Ahead has encountered operational efficiency issues while its depreciation and engineering costs have also lifted, owing to the introduction of lower-emission buses. Restructuring costs linked to the withdrawal of an Oxford-London coach service contributed to a 17 per cent fall in regional bus operating profit to £19.1m.
The inclusion of lease liabilities on Go-Ahead’s balance sheet more than trebled its adjusted net debt figure, but despite rising capital expenditure, it represents a manageable 1.53 times cash profits and sits at the lower end of the transport group’s target range of 1.5 to 2.5.
Peel Hunt forecasts full-year 2020 adjusted pre-tax profits and EPS of £97.6m and 140.7p respectively, with profits set to fall to £94.1m and EPS to rise to 143.4p in 2021.
GO-AHEAD GROUP (GOG) | ||||
ORD PRICE: | 1,137p | MARKET VALUE: | £ 491m | |
TOUCH: | 1,137-1,144p | 12-MONTH HIGH: | 2,309p | LOW: 1,137p |
DIVIDEND YIELD: | 9.0% | PE RATIO: | 10 | |
NET ASSET VALUE: | 597p* | NET DEBT: | £1.05bn** |
Half-year to 28 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
2018 | 1.92 | 44.2 | 60.7 | 30.17 |
2019 | 1.97 | 49.0 | 64.6 | 30.17 |
% change | +3 | +11 | +6 | - |
Ex-div: | 26 Mar | |||
Payment: | 17 Apr | |||
*Includes intangible assets of £118.6m, or 275p a share **Includes lease liabilities of £630.4m |