Go-Ahead Group plc (LON:GOG) shares have dived on Thursday, as the firm updated the market with its’ interim results.
David Brown, Group Chief Executive, commented: “Our London & International bus business is performing well and in line with expectations for the full year, while our expectations for our regional bus business have slightly reduced, reflecting cost pressures and adverse weather on passenger travel.
“In rail, while we await the outcome of the Williams review, our current UK operations are performing well and we are in the final stages of discussions with the Department for Transport regarding a potential direct award contract for Southeastern.
The stronger than expected UK rail performance has offset the impact of operational challenges in the first six months of running our German rail contracts. We began running rail services in Norway in December and are delivering high levels of operational performance.
“In the second half of the year our focus will be on continued management of our regional bus cost base, integrating new contracts and recent acquisitions, and improving our German rail operations.”
The travel operating firm noted that group operating profit within the first half was £60 million, this sees a slight fall from the same figure one year ago of £54.5 million.
As a results, Go-Ahead have added that their full year expectations have reduced, which reflects cost pressures and adverser weather in regional bus travel routes.
The firm added that bus operating profit fell 3.4% to £45.3 million, again this saw a fall from £46.9 million in the first half of financial 19.
On a better note, Go-Ahead said that strong performance in London and International Divisions mitigated the weaker regional performance.
Looking at rail operating profit, this figure totaled at £14.7 million – seeing another drop from £17.6 million on a like for like basis.
The firm maintained its’ interim dividend at 30.17p which should give some consistency for shareholders – despite the disappointing update.
The firm also noted that the impact of the coronavirus is yet to be fully assessed, however ‘travel patterns are likely to be impacted in the second half of the year’.
Brown concluded by adding: “While it is unclear how the coronavirus situation will evolve in the coming weeks, travel patterns are likely to be impacted in the second half of the year.
“I’m pleased with the progress we’re making towards our vision of a world where every journey is taken care of, with industry leading customer satisfaction scores in regional bus of 92% and our improving scores of 82% and 81% in GTR and Southeastern respectively. We’re also helping drive up customer satisfaction and performance in bus markets in Singapore and Ireland where tendering authorities have opened up to commercial operators.
“We have long been campaigning for a national bus strategy to maximise the benefits that buses bring to local communities and society as a whole. I’m pleased with the Government’s decision to move forward with such a strategy and its commitment to invest £5bn in bus and cycle networks in the coming years. This commitment recognises the part public transport can play in protecting our environment, supporting our communities, improving our health and wellbeing, and growing our economy.”
Shares in Go-Ahead trade at 1,313p (-21.94%). 12/3/20 10:53BST.
