TIDMNEX
RNS Number : 6599W
National Express Group PLC
19 April 2023
National Express Group PLC
Q1 Trading Update
19 April 2023
National Express Group PLC ("National Express" or "the Group")
today reports its Trading Update for the period 1 January 2023 to
31 March 2023 ("Q1" or "the period").
Unchanged outlook supported by Revenue up 17% at constant
currency, and a productivity improvement and cost reduction
programme
Overview
-- Q1 revenues of GBP774.4m up GBP153.9m (+25%) vs 2022 (+17% on
a constant currency basis), reflecting an overall performance in
line with expectations
-- Continuing strong performance in ALSA, particularly in Long
Haul and Morocco, with Porto mobilising in the year
-- North America contract wins in Transit and Shuttle in new target cities and segments
-- US School Bus contracts: expecting 13% average price
increases on contracts expiring in this bid season; limited route
recovery (in-line with expectations) as the bulk of reinstatements
happen in September
-- Strong recovery in UK Coach and in German Rail. UK Bus
affected by six-day bus driver strike and the associated pay
settlement, but with continuing passenger growth
-- Implementing a wide-ranging productivity improvement and
cost-reduction programme in response to ongoing industry and
economic uncertainties, without cutting front-line roles or our
capacity for growth
Ignacio Garat, Group Chief Executive, said:
"I am pleased to report another quarter of progress at National
Express with Group revenues in-line with expectations, albeit
affected by the bus driver strike in the UK, and recognising that
the most significant trading periods for our US School Bus and UK
and Spanish coach operations still lie ahead.
"Given ongoing industry and economic uncertainties, we have
launched a wide-ranging productivity improvement and cost-reduction
programme that will start to deliver benefits in the second half of
this year. That initiative will also help to ensure we deploy the
right resource most efficiently across the business and capitalise
on the significant opportunities for growth that we face."
ALSA
Alsa delivered another strong quarter with revenue up 33% on Q1
2022 (+26% on a constant currency basis). Long Haul continues to
trade well boosted by the impact of the free travel passes
initiative in Spain, and a strong lead up to the Easter trading
period. Our Regional and Urban operations continue to grow, and
Morocco is trading well, driven by Rabat and Casablanca. We have
also started mobilisation of our Porto contract in Portugal, with
operations commencing in November this year.
North America
North America revenues grew by 21% on Q1 2022 (+10% on a
constant currency basis).
Whilst progress continues to be made in School Bus on the
associated issues of driver recruitment and route reinstatement,
the next opportunity for a significant step change in performance
will come with the start of the next school year in September. We
remain focused on driver recruitment and route reinstatement.
Contract pricing increases have been good: based on progress to
date we expect to achieve an average price increase of c.13% across
the portfolio of expiring contracts. Net new business wins have
been slightly below expectations, but with some further
opportunities remaining.
In Transit and Shuttle, we have won a new 10-year fixed route
and paratransit contract in Charleston: a key Evolve target city.
The shuttle business continues to diversify away from its
traditional technology sector customer base, as revenues from that
segment suffer what appears to be cyclical pressure, with new work
in manufacturing with Tesla in Buffalo, NY and a university
contract in San Mateo.
UK & Germany
In the UK, revenue grew by 27% on Q1 2022
Scheduled coach revenue was up 87% on the prior year, reflecting
the recovery from the Covid related network shutdown in prior year
and the impact of the rail strikes in the UK. During the quarter,
the business was impacted by the now settled UK Bus drivers'
strike, and the associated pay settlement. Whilst that pay
settlement was higher than expected, we are working internally, and
with our partners Transport for West Midlands (TfWM), towards
mitigating the impact of these and other cost increases.
In the first quarter of the year, we also placed a firm order
for 170 additional double deck electric buses. The resulting fleet
will be the largest of its type in the UK and includes an earlier
order for 130 buses that are part of the UK Government's ambitions
to make Coventry the country's first All-Electric Bus City by
2025.
Our German Rail business also delivered another good quarter of
growth, up 10% on prior year (+5% on a constant currency basis).
This reflects the continuing operation of the Lot 1 contract on an
emergency basis, with plans well progressed to transition to the
10-year contract from late 2023.
Productivity improvement and cost-reduction
In the context of continuing uncertainty in the external
environment, we continue to take decisive action. Fuel hedges are
in place covering 100% of 2023 volumes, 59% of 2024, and 26% of
2025 volumes. We also have a number of mechanisms in place to
mitigate the impact of wage settlements, and we have long-term
supply agreements on the majority of our remaining non-staff
costs.
In addition, we have launched a new productivity improvement and
cost-reduction programme. We are targeting at least GBP25m
annualised savings, with the first beneficial impact of those
actions delivered in H2 2023. This programme will not affect
front-line roles or our capacity for growth.
Balance Sheet and currency
Over 80% of Group debt is at fixed interest rates. As previously
communicated, we have already put in place a bridge-to-bond
facility in respect of the GBP400m bond due November this year. We
expect incremental annualised interest costs from this bond
refinance to be in the region of GBP12m. As we manage the currency
profile of our debt to match the currency in which EBITDA is
generated, our covenant leverage is not impacted by currency
volatility. We continue to see a clear path to debt reduction,
which remains a priority, and we expect to be close to our target
covenant leverage range of 1.5x to 2.0x Net Debt to EBITDA by Q1
2025.
Enquiries
National Express Group PLC
James Stamp, Chief Financial Officer 0121 803 8820
John Dean, Investor Relations Director
Headland
Stephen Malthouse 07734 956201
Matt Denham 07551 825496
There will be a conference call for investors and analysts at
9.00am on 19th April 2023.
You can join the call at:
https://www.netroadshow.com/events/login?show=dda95ef1&confId=49413
Alternatively, details are available from Headland:
nationalexpress@headlandconsultancy.com
About National Express
National Express is a leading, international shared mobility
provider with bus, coach and rail services in the UK, North
America, continental Europe, North Africa and the Middle East.
Notes
Legal Entity Identifier: 213800A8IQEMY8PA5X34
Forward looking statements and other important information
This document contains forward-looking statements with respect
to the financial condition, results and business of National
Express Group PLC. By their nature, forward-looking statements
involve risk and uncertainty and there may be subsequent variations
to estimates. National Express Group PLC's actual future results
may differ materially from the results expressed or implied in
these forward-looking statements. Unless otherwise required by
applicable law, regulation or accounting standard, National Express
does not undertake to update or revise any forward-looking
statements, whether as a result of new information, future
developments or otherwise. Forward-looking statements can be made
in writing but also may be made verbally by members of the
management of the Group (including without limitation, during
management presentations to financial analysts) in connection with
this document.
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