By Anthony O. Goriainoff
National Express Group PLC said Thursday that revenue has continued to improve in the third quarter of the year, and it backed its full-year underlying pretax profit expectations.
The London-listed public-transport operator said that revenue in the third quarter was 83% of that recorded in the same period in 2019, before the pandemic. Revenue in the second quarter of this year reached 76% of the same quarter in 2019.
The London-listed public-transport operator said that although driver shortages were continuing across the sectors in which it operates, it was minimizing the effect on revenue and tightly controlling costs.
National Express added that it has agreed on wage settlements across the business and expects 5% driver wage inflation in North America for the 2021-22 school year because of the current tight labor market.
The company also said that it still expects robust positive free cashflow this year, reflecting improved performance as well as capital-expenditure reduction actions that were taken in 2020.
"Our ongoing focus on cost management along with our long-established procurement and fuel hedging programs mean that we have seen no material impact from input cost inflation. We continue to focus on profitable growth with a strong pipeline of opportunities across the group and recent contract wins in Spain and the U.K.," Chief Executive Jose Ignacio Garat said.
National Express added that discussions and reciprocal due diligence with Stagecoach PLC over a potential all-share combination were continuing, but reiterated that there is no certainty any deal will be struck. The companies said on Sept. 21 that they were in merger talks that would give Stagecoach shareholders 25% of the combined group if a deal proceeds.
Under any takeover, Stagecoach shareholders will get 0.36 new National Express ordinary shares for each Stagecoach ordinary share held.
National Express has until Oct. 19 to either make an offer or walk away under U.K. Takeover Panel rules.
The company hasn't provided any full-year profit figures. However, underlying pretax profit consensus for the year ending Dec. 31--a metric that strips out exceptional and other one-off items--is 39.8 million pounds ($54.4 million), taken from FactSet and based on four analysts' forecasts. This compares with a loss of GBP106.1 million in 2020 and a profit of GBP240.0 million in 2019.
Shares at 0830 GMT were up 3.60 pence, or 1.6%, at 233.80 pence.
Write to Anthony O. Goriainoff at anthony.orunagoriainoff@dowjones.com
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National Express Revenue Continued to Improve in 3Q -- Update - MarketWatch
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