Pandemic and loss of final two rail franchises behind move

Stagecoach’s revenues plunged by 25% in the 53 weeks ending May 2 as the loss of its final two UK rail franchises and the coronavirus pandemic took their toll on the Perth-based group.

Turnover fell from £1.88bn to £1.42bn, while operating profit, adjusted for one-offs, tumbled from £161m to £119.7m.

It’s a bitter blow for the group which revealed that its regional bus revenue trends were improving prior to the pandemic; it had experienced 2.7% like-for-like revenue growth in the 14 weeks ended February 1, 2020.

Despite the woes of coronavirus, the group added it believes there are good long-term prospects for public transport in the UK as a result of a “renewed societal focus on health, wellbeing and the environment” post-pandemic.

“We have achieved a creditable set of financial results in what has been one of the most challenging and sobering periods for citizens, communities and economies across the globe in living memory,” said chief executive Martin Griffiths.

“Prior to the Covid-19 pandemic, the business was on track to meet its expectations for the full year. We made good progress in delivering on our three key strategic objectives: to maximise our core business potential, manage change through our people and technology, and grow by diversifying, while maintaining our relentless focus on safety and customer service.

“In responding to the more recent global challenges, we have taken decisive action so that the business remains in as strong a position as possible and well placed to secure the significant long-term opportunities we see for public transport.”

Griffiths added that short-term actions by government and local authority partners had helped protect public transport networks. He also said he has also been encouraged by the “good momentum” created by the positive direction of government bus policy and investment.

“Despite recent events, it is critical that all partners continue to work together to prioritise better mobility, maintain the cleaner air and take action to protect the future of our planet as part of the plan for global recovery,” he concluded.

Elsewhere the group revealed that it was continuing to implement new people systems and had introduced new branding and marketing strategies for its regional bus operations.

Stagecoach also said that passengers are continuing to move away from cash payments with 46% of all commercial bus revenue in 2019/20 derived from either contactless payments of digital payment channels.

Meanwhile, the group has indicated it is looking to diversify away from the UK market once again and had been shortlisted for two bus contracts in Dubai. The group was also bidding for opportunities in Sweden.

Turning to environmental matters, 41% of the group’s bus fleet was now powered by either Euro 6 clean diesel, ultra-low emission or zero emission technologies, up from 33% in June 2019.

On that note Stagecoach also says it is nearing completion of a new sustainability strategy with a roadmap to becoming a zero carbon business.

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