National Express (NEX) is focused on improving its market share. The transport group spent £143m on 11 acquisitions during 2018, of which £26.8m has been deferred into future years, split 50/50 in terms of cash spend between North America and bus company ALSA. Chief financial officer Chris Davies said the deals were done to enter new segments in these existing markets, or to do bolt-on deals from a strategic perspective.
North America still appears to be ripe for consolidation, with more than 1,000 private school bus businesses in the US alone. Near-full employment in the US has pushed up driver salaries, but Mr Davies said that the price increases National Express has put through on its contracts has more than compensated. In new opportunities, he continues to target a minimum return on capital employed of 15 per cent.
Chief executive Dean Finch hailed the results “record-breaking”, with organic revenue growth in every division. The one near-exception is German rail, where revenue technically fell 15.1 per cent to €76.6m (£65.6m) at constant currency due to catch-up revenue from 2016 being paid in 2017. Strip this out and sales were up 5.4 per cent on an underlying basis.
Analysts at Liberum expect adjusted pre-tax profits of £230m during 2019, giving EPS of 34.1p, up from £218m and 32.5p in 2018.
| NATIONAL EXPRESS (NEX) | ||||
| ORD PRICE: | 420p | MARKET VALUE: | £2.15bn | |
| TOUCH: | 419-420p | 12-MONTH HIGH: | 427p | LOW: 348p |
| DIVIDEND YIELD: | 3.5% | PE RATIO: | 16 | |
| NET ASSET VALUE: | 229p* | NET DEBT: | 79% | |
| Year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2014 | 1.87 | 67 | 11.6 | 10.3 |
| 2015 | 1.75 | 123 | 20.9 | 11.3 |
| 2016 | 2.09 | 135 | 23.0 | 12.3 |
| 2017 | 2.32 | 156 | 25.7 | 13.5 |
| 2018 | 2.45 | 178 | 26.6 | 14.9 |
| % change | +6 | +14 | +4 | +10 |
| Ex-div: | 22 Apr | |||
| Payment: | 14 May | |||
| *Includes intangible assets of £1.8bn, or 351p a share | ||||
