Stagecoach Warns of Economic Uncertainty after Brexit

Stagecoach Warns of Economic Uncertainty after Brexit

Stagecoach has warned of an uncertain economic future for the company following Britain’s decision to leave the European Union.

Earlier in the week the transport operator reported a 37% decrease in profits before tax for the year 2015-16 and subsequently warned that there will be further uncertainty for the economy, consumers and politically after the Brexit vote.

The firm runs buses in the US and Europe and trains in the UK and in the year to April generated a profit of £104.4 million before tax, substantially less than £165.2 million the year before.

Meanwhile, the company’s revenue increase by 21% in 2015-16 and underlying operating earnings went up by 1%.

However, the pre-tax profits fell drastically primarily because of an increase in one off items, including a write down on its joint venture in New York sightseeing and costs related to early bond redemptions.

Stagecoach Chief Executive, Martin Griffiths, is to monitor the developments of Brexit closely and said that they, like other business sectors, will be affected by a reduction on public spending and wider economic factors, including weakening consumer confidence.

The firm has also confirmed that it has sold the retail arm of its low fare business, Megabus, in continental Europe to the German intercity bus service operator Flix Bus; although Stagecoach will still operate some coach services in Europe under the Flix Bus contract.

However, the ticket sale, pricing, marketing and timetabling operations will be offloaded to Flix Bus, with the transaction set to be completed next month.

Company shares closed up nearly 4% at 226.5p and analysts at UBS said that the small beat in the Stagecoach’s results, along with the disposal of a business that was making a loss, should be a positive sign for the company’s market future.

However, Stagecoach bosses insist that revenue growth in the UK bus division is continuing to decelerate as households take advantage of low oil prices and drive their cars more.

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