TIDMNEX
RNS Number : 4762D
National Express Group PLC
20 October 2022
National Express Group PLC
Q3 Trading Update - Sustained momentum across the Group
20 October 2022
National Express Group PLC ("National Express" or "the Group")
today reports its Trading Update for the period 1 July 2022 to 30
September 2022 ("Q3" or "the period").
Overview
-- Revenue up 33% year on year and 5% ahead of 2019 levels at constant currency
o ALSA up 35% year on year, North America up 11%, UK up 30% and
Germany up 63%
-- Ongoing recovery in passenger journeys across our diversified markets
o Strong growth in UK and Spanish coach businesses, alongside
rising occupancy and yields, with bus patronage also recovering
well
-- Good progress towards meeting full-year driver recovery
targets in North America School bus, although the labour market
remains tight
-- FY 2022 results anticipated to be broadly in line with expectations
Ignacio Garat, Group Chief Executive, said:
"I am pleased to report sustained momentum across the Group and
another period of operational progress and revenue growth. We
continue to see strengthening passenger numbers in our coach
businesses in the UK and Spain, and we are focused on meeting our
driver recovery targets for the full year in our North America
school bus division.
"We are well positioned for the current inflationary environment
with long-term supply contracts, fuel hedging, and a proven ability
to pass through price increases over time. While we are mindful of
the challenges we face in our sector, we are confident in our
Evolve strategy and look forward to making further progress."
Divisional operating highlights
ALSA
ALSA delivered another strong quarter, with revenue up 35% year
on year and 20% ahead of 2019 levels, both in constant currency.
Growth was particularly strong in Long Haul, where revenue grew by
53% and passenger journeys were up 42% year on year. Occupancy is
now running at 64%, over 5 percentage points higher than 2019.
Yield increased by 8% year-on-year, and is up 5% versus 2019.
Morocco continues to deliver strong growth, delivering record
daily passenger numbers: revenue is up 37% and passenger journeys
are up 21% year on year.
We continue to make good progress in Portugal with our
mobilisation in Porto on track for next year, and we are
progressing a number of significant bid opportunities, in both
existing and new geographies.
North America
Revenue grew 11% year on year in the period, in constant
currency.
We have made encouraging progress on driver numbers, with the
driver shortage narrowing significantly compared to the position at
the end of the 21/22 School Year, and in line with our targets.
Our focus on recruitment has resulted in over 40% more hires
than in the prior year, boosted by highly targeted online
recruitment initiatives and social media activity, which saw
applications through these channels up over 30%. We also boosted
our field based recruitment resource, and optimised our training
and on boarding processes. In parallel, we continue to drive
retention with targeted pay increases where appropriate, and we
have implemented steps to ensure that as drivers return, routes are
re-instated. Early signs are encouraging, but the market remains
challenging and this is our key area of focus in school bus.
Our Shuttle and Transit businesses made further progress in the
quarter, with revenue up 21% and 7% respectively year-on-year, with
Shuttle revenue ahead of 2019 levels. We have won three new shuttle
contracts, with two contracts in the Universities sector, and are
making further progress in our Boston hub, which is a key city we
targeted for expansion. In addition we have renewed a number of
other contracts during the period on improved terms.
As we focus on further improving our return on invested capital,
we are close to finalising the details of our first electric school
bus "availability contract" at scale.
UK & Germany
UK revenue grew 30% in the period, largely driven by very strong
growth in our core coach operations where revenue more than doubled
year on year, occupancy was up nearly 20 percentage points year on
year to 78% (8 percentage points ahead of 2019) and yield was up
21% versus 2019. Our ability to react quickly to events means that
we were able to provide more services during rail strikes, and we
were proud to play a part in supporting the Metropolitan Police
during the Queen's funeral. On several of our core UK inter-city
corridors, we are now seeing demand well in excess of 2019
levels.
UK Bus commercial patronage continues to improve and is now
running at around 90% of 2019 levels and up 24% year on year. The
Bus Services Improvement Plan (BSIP) funding of GBP88 million (over
three years) has been formally granted to Transport for West
Midlands ( " TfWM"). This funding has allowed TfWM to announce
frozen fares, and for us to seek to maintain our comprehensive
network as passenger numbers recover. The phasing of the grant (and
associated revenue recognition) is expected to be finalised
shortly.
Our German rail business delivered another quarter of strong
growth, with revenue up 63% year on year, in constant currency,
largely reflecting contract awards of two new services at the start
of the year.
Balance Sheet, currency, and interest rates
We are well positioned to weather the current market volatility.
We have Inflation protection from fuel hedges, covering 100% of
2023 volumes, and 50% of 2024 volumes. We have long-term supply
agreements on the majority of our remaining non-staff costs, with
inflation expected to be in the region of 4% over the next 12
months. Staff cost negotiations are ongoing and are progressing in
line with our expectations.
Over 80% of debt is at fixed interest rates with no material
exposure to increased interest rates until 2024. Because we manage
the currency profile of our debt to match the currency in which
EBITDA is generated, our covenant leverage is not impacted by
currency volatility. We expect to be in line with covenant leverage
guidance of 2.5x to 3.0x net debt to EBITDA at year end.
Enquiries
National Express Group PLC
James Stamp, Interim Group Chief Financial
Officer 07710 056098
Alison Cole, Group Corporate Affairs
and Sustainability Director 07552 267295
Louise Richardson, Head of Investor
Relations 07827 807766
Chris Davies, Group Chief Financial
Officer 0121 460 8655
Headland
Henry Wallers 07876 562436
Matt Denham 07551 825496
There will be a conference call for investors and analysts at
8.00am on 20(th) October 2022. Details are available from Headland:
nationalexpress@headlandconsultancy.com
About National Express
National Express is a leading shared mobility provider with bus,
coach and rail services in the UK, North America, continental
Europe, North Africa, and the Middle East.
Notes
Legal Entity Identifier: 213800A8IQEMY8PA5X34
Forward looking statements and other important information
This document contains forward-looking statements with respect
to the financial condition, results and business of National
Express Group PLC. By their nature, forward-looking statements
involve risk and uncertainty and there may be subsequent variations
to estimates. National Express Group PLC's actual future results
may differ materially from the results expressed or implied in
these forward-looking statements. Unless otherwise required by
applicable law, regulation or accounting standard, National Express
does not undertake to update or revise any forward-looking
statements, whether as a result of new information, future
developments or otherwise. Forward-looking statements can be made
in writing but also may be made verbally by members of the
management of the Group (including without limitation, during
management presentations to financial analysts) in connection with
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