National Express shares were down 4.3% to 258.8p in early morning trading on Tuesday, after the travel group reported its latest trading statement, with an expected FY 2022 revenue of £2.7 billion.
UK revenue is set to trend in line with expectations, with bus patronage at 85% of pre-Covid-19 levels and coach recovery progressing at a quicker rate than expected, along with airport volumes at two-thirds of pre-pandemic levels.
National Express mentioned that German Rail revenue is almost four times pre-coronavirus rates, driven by new contracts, and North American shuttle revenue has exceeded 90% of 2019 levels on returns to office working environments.
However, the group has faced challenges on its school bus sector, with 10% of contracted routes not running due to industry-wide driver shortages.
National Express reiterated its medium-term guidance of delivering at least £1 billion in revenue growth from 2022-2027, with an average profit margin of 9% and recovery to pre-Covid-19 margins of approximately 10% later in the term.
The growth is projected to drive significantly more than £100 million in EBIT increases over the same period.
The travel firm said it expected recovery in profitability to lag its revenue recovery, resulting in margins initially below its 2022-2027 average, however it estimated a 2022 margin of approximately 7%.
National Express confirmed an estimated £1.25 billion in free cash flow between 2022 and 2027 with cash conversion rising to approximately 80%, and cash conversion in 2022 expected to hit close to 2019 levels.
The company added that it expected to reinstate its dividend in its FY 2022 results.