Stagecoach sees its pre-tax profit fall by 40% to £24.7m
Stagecoach (LON:SGC), the Scottish transport group, confirmed its profit and revenue declined during the pandemic as lockdowns negatively impacted the industry.
The group also revealed that it is getting rid of its full year dividend.
Stagecoach saw its profit before tax fall by 40% to £24.7m, while revenue for the year ending in May fell by £0.472bn to £928m.
“During the worst of the lockdowns, bus operators like Stagecoach saw just 25% of regular passenger numbers, this was back up to 50% by May and is still climbing. Stagecoach is now beholden to a new set of circumstances beyond their control such as public confidence, hybrid working patterns and the vaccine rollout,” said Ben Nuttall, Senior Analyst at Third Bridge.
“Rail journeys are more driven by people heading to work, whereas bus journeys are driven by leisure activities. This implies hybrid working patterns are more likely to have a long-term impact on trains rather than buses.”
Stagecoach is looking to the future now which could involve a shift in how transport is used.
“We expect a reconfiguration of demand within local transport networks,” the company said.
23% of its bus journeys outside of London were made by residents for commuting and business, meaning the company is less reliant on these travellers than other modes of transport.
“We see an overall net positive opportunity as government policy, changing consumer attitudes, health drivers and climate change targets necessitate less use of cars and more use of sustainable public transport and active travel,” the company said.
Stagecoach added: “It remains difficult to reliably predict the speed and extent of the recovery in the short-term, including the level of profit for the new financial year ending 30 April 2022.”
“The Government’s bus strategy marks a fork in the road for the UK bus sector,” say Nuttall.
“Our experts predict that where Stagecoach don’t achieve the partnership model they are pushing for, foreign operators, like RATPDev and Abellio, are likely to swoop in – given that Stagecoach is unlikely to accept the low margin of a franchise.”
Stagecoach faces some difficult structural issues around congestion, the decline of the high street, and the UK’s changing demographic.
“The pandemic has pushed bus operators like stagecoach to think a lot harder about the presentation and cleanliness of their vehicles as they fight to get passengers back on board.”
