National Express has accelerated nearly 10% after a positive outlook following a drop in 2012 profits.
The transport group said it was unable to overcome the decline of one million in the number of elderly coach customers which followed the removal by the UK government of its concessionary scheme.
The drop in coach revenues helped push profits down from £180m to £164m, in what the company called one of the most difficult years in its 40 year history. But with recent contract wins in Spain and north American, and its selection to run two rail contracts in Germany, it was optimistic about the outlook:
We expect to deliver organic growth in four of our divisions as our combination of value for money fares and operational excellence provides a compelling passenger offer in austere times. We are determined to build on our recent contract successes....as we leverage our strong international business portfolio to deliver growth.
Its shares have added 19.3p to 214.6p, making it the biggest riser in the FTSE 250, and in a buy note Jefferies said:
The December pre-close guided results to be in line, yet pretax profit has been delivered a bit ahead of consensus. But within that, rail contribution was strong and the c2c franchise is currently due to expire in May (although extension is under discussion). Overall, we therefore do not expect the consensus outlook to change materially post results.
The group has previously adopted a cautious tone for 2013. Management steers "good progress" in UK bus (although there are fuel cost headwinds to mitigate), UK coach and north America, although highlights that the second half of 2012 trends in Spain (resilient urban revenue and growth in Morocco offset by lower intercity revenues) are expected to continue through the first half of 2013.
Greg Johnson at Shore Capital said:
Despite today's slightly better results we are likely to maintain our 2013 profit estimate of £146m, modest profit growth ex-rail although noting upgrade potentially if recent currency moves persist. The stock remains attractive in our view. The underlying trading is solid with scope for contract wins both in UK rail and international.
