Stagecoach profits hit by rail division

BRITISH transport group Stagecoach said yesterday it should have a stronger second half as its East Midlands rail unit returns to profitability, after a loss at the franchise weighed on first-half profits.

The bus and rail operator said yesterday its British rail business swung to a first-half loss following weak trading at the East Midlands franchise, leading to an 18 per cent drop in group profit.

Pre-tax profits in the six months to October fell to £88.7m compared with a forecast for £96m.

UK Rail swung to an operating loss of £6.9m from a profit of £22.9m.

Panmure, which described the results as excellent, said in a note: “The outlook for Stagecoach remains positive.

“The prospects for long-term growth in passenger transport are good given the rising environmental concerns, increasing road congestion and higher motoring costs.”

The regional bus division operates in 100 towns and cities across thee UK. Operating profits at the unit were up nine per cent to £80m.

Stagecoach also has a 49 per cent stake stake in Virgin Rail, which saw operating profits fall 11 per cent to £12.2m.

The company said its business remained strong especially as cash strapped Britons were ditching their cars in favour of bus and train travel.