Stagecoach has reported a nine per cent increase in revenues in the year to April 30th, bringing the figure to £3.2 billion.
The transport group's positive results can be attributed to a strong demand for train travel in the UK, as profits rose by 2.4 per cent to £185 million, despite a decrease in bus passengers.
The Perth-based transport company runs a joint-venture with Virgin Rail to serve the London-to-Scotland East Coast Main Line. This saw earnings climb to £28 million from £2.6 million a year earlier, reports the BBC.
Stagecoach's wider UK rail business also includes South West Trains and East Midlands Trains. Both of these businesses saw earnings drop to 22 per cent to £26.9 million due to rises in premium payments to the UK government. However, a rise in passenger numbers helped to increase revenue by 18.1 per cent at the division.
Commenting on the results, chief executive Martin Griffiths said: "These are a solid set of results, not withstanding continued tight central and local government spending and increased competition for public transport from the private car driven by lower fuel prices."
Decrease in bus passengers
While rail travel has been on the rise, earnings from bus travel for the group have fallen short of targets set earlier this year.
One reason for a fall in bus travel has been the drop in petrol prices – the company's coach service operations in the US also saw a decline in profits. However, Stagecoach has also said the fall in fuel costs will ultimately help the group by lowering business costs for the next two financial years.
"The sharp reduction in oil prices during the year resulted in a fall in car operating costs," explained Mr Griffiths.
"The increased competitive advantage this gave to cars affected the profitability of some of our businesses, most notably ourmegabus.com inter-city coach operations in North America," he added.
However, he said he expects further opportunities in continental Europe as governments liberalise inter-city coach services.
Megabus, one such European coach service has seen new domestic networks in Germany and Italy and passenger volumes in mainland Europe have increased by more than 60 per cent in the past year.
At 16:30 BST, Stagecoach stocks were up 2.56 per cent to 416.60.
GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.