National Express has upped its dividend after announcing a 10 per cent rise in pre-tax profits, thanks to solid growth outside the UK.
Pre-tax profits of its continuing operations for the year rose 11 per cent to £136.3m, while pre-tax profits for all operations including UK rail, rose 10 per cent to £120m.
Group revenue rose 20 per cent to £2.1bn and National Express said it expects operating margin to rise over the next two years because of anticipated savings in the cost of fuel.
It carried 921m passengers across its services for the year, upped by record numbers in Spain and Morocco.
National Express said the combination of the strength of its business and offloading its c2c franchise commitments has led to it raising free cash flow guidance to £120m and proposing a 10 per cent increase in the final dividend.
Shares rose 3.34 per cent in early trading to 353.20p.
Why it's interesting
Last month, National Express quit UK rail through the £72.6m sale of its last remaining franchise c2c to Trenitalia. The sale was completed at the beginning of this month after the Department for Transport (DfT) approved it.
The firm said it will focus on its growing operations in North America and continental Europe as the disposal freed up for capital for investment "in higher growth markets". But the sale of c2c hasn't gone down well with the unions.
RMT boss Mick Cash said: "This is yet another part of Britain's rail operations being sold off to a European state-owned outfit. This time it's Trenitalia, an Italian operator, that is being given an open door to plunder passengers and the public purse to subsidise rail services in their own country."
What the company said
Dean Finch, National Express group chief executive said:
With the recent sale of our c2c franchise, we have further opportunity to invest in our fastest growing markets which deliver strong returns, but we will continue to do so in a disciplined manner.
We have developed a strong track record and team in identifying and completing acquisitions that generate significant value and we have identified a strong pipeline of further opportunities.
Our confidence in the future is demonstrated by the increase in our annual free cash flow guidance to £120m and the proposed 10 per cent increase in the final dividend.