National Express on road to success with new contract win

British multinational transport company National Express Group PLC (LON: NEX) posted bumper fundamentals for the three month period ended 30 September 2019, which it said owed to significant contract wins.

The Company booked impressive profit growth of 14.3%, which was led by a 14.5% bounce in revenues. It added that its operating margin was ‘up’ during the period.

Operationally, the Company announced the renewal and expansion of its second largest North American transit contract. The deal will see revenue double to $420 million across the 7.5 years of the contract. Further, the Group’s new National Express Accessible Transport offering commenced ‘successfully’ during the period, with a 400 vehicle fleet expected to target the ‘growing market’ int the West Midlands.

By far the biggest revelation, though, was the Company’s 1 billion contract win in Casablanca. The contract covers 700 buses in the Morocco region, which will last 15 years and almost doubles the scale of their existing offerings in Morocco.

National Express comments

Dean Finch, Group Chief Executive, said,

“We had another good trading performance in our key summer period. ALSA performed particularly well and our UK coach business grew despite lapping a very strong comparative period last year. North America posted strong growth, boosted by both our WeDriveU acquisition and a good back-to-school performance including improved wage control.”

“With these results, the further delay to Spanish concession renewal and our recent successes in winning, retaining and mobilising significant contracts, our outlook remains positive. We will continue to focus on operational excellence as the foundation of our strategy to drive growing shareholder returns and maintain profit growth in the coming years.”

Investor notes

Despite the positive update, the Company’s shares dipped 0.044% or 0.20p to 451.60p 17/10/19 14:34 BST. Analysts from RBC Capital Markets reiterated their ‘Top Pick’ stance on National Express stock. The Group’s p/e ratio is 13.73, their dividend yield is 3.29%.

Elsewhere in travel and aviation, there have been updates from; International Consolidated Airlines Group (LON: IAG), TUI AG (LON: TUI), Thomas Cook (LON: TCP), Fastjet PLC (LON: FJET), John Menzies plc (LON: MNZS), Wizz Air (LON: WIZZ) and Ryanair Holdings Plc (LON:RYA).

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Senior Journalist at the UK Investor Magazine. Also a contributing writer at the Investment Observer, UK Property Journal and UK Startup Magazine. Postgraduate of King's College London with a specialisation in Business Ethics. Interested in Development Economics and David Hume.