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National Express moves forward after figures, but FTSE 100 remains nervous

Transport group unveils record profits two years after falling into loss

Transport group National Express has accelerated nearly 4% in another nervous market following its full year figures.

The company said pretax profits had climbed 12.3% to £180.2m, with strong performances from its UK coach and US school bus business. Two years after reporting a loss, the company’s profits have hit a record, and it is positive about the outlook. Chief executive Dean Finch said:

Following a strong end to 2011, we expect passenger revenue to continue to grow in each of our bus and coach divisions. In 2012, as austerity measures, fuel and fare increases make passenger travel by other modes relatively more expensive, National Express provides attractive, value for money alternatives.

Its shares have added 7.9p to 229.1p. John Lawson at Investec issued a buy note:

In effect, the recovery is now largely complete (margins in North America for example have now reached 10%) and the future business prospects (UK Rail excepted) look encouraging. Whilst we make no changes to forecasts today, we move our recommendation to buy from hold and expect market sentiment towards the stock should continue to improve.

But Gert Zonneveld at Panmure Gordon kept a hold recommendation on the company, saying:

The outlook statement is positive with the expectation that revenues will continue to grow in each of the bus and coach divisions. UK rail should be significantly impacted by the end of the East Anglia franchise. The company expects sustainable earnings growth, continued cash generation and exciting opportunities for growth in selected markets in the medium term. The turnaround programme has delivered significant improvements in UK bus and North America and the company seems to be in control of its businesses and is delivering on its targets. It is still unclear whether National Express has a long term future in UK rail.

The company hopes to complete the purchase of US student bus company Petermann Partners in the first half of the year, but dismissed the idea that it was considering a disposal of its UK rail business,.

Overall the FTSE 100 is currently 5.90 points higher at 5933.81, as the market awaits news of the European Central Bank’s new loans programme as well as further parliamentary votes on the Greek bailout, Netherlands for example.

ITV is topping the risers in the leading index, up 6.2p at 86.7p following its figures. But Essar Energy, a volatile stock in recent days after its earnings misses expectations on Monday, was down again. It has lost 7.9p to 105.5p as Credit Suisse cut the Indian group from outperform to neutral. The bank said:

Essar [is] down 37% year to date mainly on a negative Indian Supreme Court ruling on its deferred sales tax benefits. [It] still offers a strong growth and long-term cash generation profile, but we need more clarity on near-term financing and progress on negotiations with the state government and lenders. © 2012 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds