Mobico Group, formerly known as National Express, saw its revenue rise 18.5 per cent to £1.57bn in the first half of the year, as it benefited from rising passenger demand across the majority of its international networks.
However, this was not enough to offset rising wage costs associated with inflation and the removal of a Covid-era £60m support package, with the group reporting a loss of £23.4m.
Its shares fell 7 per cent on the announcement.
Ignacio Garat, Mobico Group chief executive, said: “We saw strong revenue growth in the first half, driven by customer demand. The profit result compared to prior year was impacted by a £60m reduction in Covid-19 funding.”
Operating profits also fell from £42.3m to £8.7m year-on-year.
Garat argued that “although operating profit was down on the year, once the £60m reduction in 2022 Covid support is taken into account, adjusted operating profit grew significantly.”
He noted “significant wage inflation” but said that the firm had seen “encouraging passenger growth,” which would offset “market uncertainties.” The company expects full year profits to be between £200m and £215m.
Mobico – which changed its name from National Express in May to reflect its move into international markets – said its UK revenues were up nearly 20 per cent on the back of strong passenger growth in its Coach and Bus segments.
A string of rail strikes have helped prop up the firms’ profits in the UK, as passengers opt for bus and coach amid a years worth of industrial action.
It said today that its UK scheduled coach network grew eight times faster than the rest of the market, with 12 per cent of first-time users on rail strike days using the service again.
Earlier this year, National Express saw a 30 per cent rise in bookings in the week where union action coincided with an FA Cup and Eurovision final.
Industrial feuds among National Express’ own workers have separately dented the firms’ outlook, however.
Around 3,200 members of the Unite Union employed by National Express’ West Midlands branch planned walk-outs in March and were successful in achieving a 16 per cent pay increase.
Mobico Group said today that the bus drivers strike and associated wage settlement had “significantly impacted” the UK branch, noting a subsequent 12.5 per cent fare increase from early July.
Russ Mould, investment director at AJ bell, said “the renamed National Express – Mobico – may be looking for another identity shift after today’s first-half numbers went down like a lead balloon.”
“The transport company has been hit by the withdrawal of Covid-related support and a big increase in costs – notably on wages” he explained.
Despite this, Mould noted the companies’ confidence that cost reduction measures could “make up for the inflationary pressures seen in the first half,” with a “pronounced second-half weighting in 2023.”