National Express reports revenue growth led by European ventures

 
James Nickerson
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Chief exec Dean Finch said there was subdued growth in the UK (Source: National Express)

National Express reported strong growth today despite a subdued UK market.

The figures

National Express posted group revenues up 14.4 per cent for the first half of 2016 to £1.1bn.

The company reported pre-tax profit up 4.8 per cent to £56.9m in the six month period ending 30 June.

Net debt rose by £88.4m to £802.7m, while its interim dividend rose by five per cent to 3.87p per share.

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Why it's interesting

National Express has expanded into European markets again, buying a bus operator on Ibiza, the Spanish island.

The company "completed a small acquisition of a regional bus business in Ibiza, providing our first entry onto the island", it said. It is also looking at opportunities in Morocco.

It's doing this as the UK's growth has somewhat slowed recently, and the company is slightly concerned about Brexit.

Read more: National Express share price accelerates after passenger rise

It has already gone into Spanish, US and Bahraini buses, as well as German rail. In fact, it made two thirds of its earnings outside of the UK.

Ironically, that shows that it has made money from currency headwinds after Sterling fell.

"It is possible that there may be an economic slowdown in the UK as a result of the vote for Brexit in the EU Referendum. However, with two-thirds of Group earnings generated in North America and Spain, where we expect to see no significant immediate effects from ‘Brexit’, we feel that the Group is well-positioned to deal with any short-term uncertainty in the UK," the company said.

The company appears to be doing well, its share price having jumped 13 per cent in the last year.

Analysts at Bank of America Merrill Lynch were impressed. They wrote: "National Express has reported a robust set of first half results. The results were the net of stronger than expected performance in Spain and North America alongside slightly weaker-than-expected results in UK coach."

What National Express said

Dean Finch, National Express group chief executive, said:

We have made a good start to 2016 and despite subdued growth in the UK we remain on track to deliver our expectations for the year.

The diversity of our cash generative, international portfolio of businesses where two thirds of our earnings are generated outside of the UK, is a key strength that allows us to grow and to declare a five per cent increase in the interim dividend

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