Portfolio

National Express swings to loss as Covid lockdowns hits traffic numbers

By Frank Prenesti

Date: Thursday 13 Aug 2020

(Sharecast News) - Bus operator National Express swung to a half year loss after the coronavirus lockdown led to an 80% slump in passenger traffic.
The company, which operates bus services in Europe and the US, on Thursday reported a pre-tax loss of £122.2m from a profit of £88.4m a year earlier as revenue fell 22.7% to £1.03bn. Core earnings slumped to £88.3m from £243m in 2019.

It added that a gradual service restart was showing "encouraging early signs of demand returning as restrictions are eased", but activity remained "at much suppressed levels". No guidance for the full year was provided.

All transport providers have been hit by school closures and a sharp rise in the number of people working from home during the the pandemic. National Express said it would continue measures "to strengthen the balance sheet, improve liquidity, cut capital and operational costs".

"While there are some signs of demand returning, levels are both significantly reduced and subject to variability given local lockdowns, the impact of quarantines and uncertainty over the extent of US school re-openings," said chief executive Dean Finch.

The group had a total of £1.7bn in cash, committed facilities and the undrawn component of the Coronavirus Corporate Finance Facility. In total, together with £230m raised in May from a placing, £1.5bn of new sources of funds had been secured since the start of the lockdown in March.

It generated £270m of cash in the second quarter excluding debt and equity raises as management cut costs, reduced operations, took advantage of government support and negotiated contributions from contractual customers.

Analysts at Liberum said they continue to forecast that public transport usage reverts to normal on a 12-24 month view., but warned the prospects of a quick and sharp recovery were fading.

"The pace of recovery will vary across the group's divisions. We expect school bus operations in North America to exhibit a rapid recovery once schools reopen. It is increasingly unlikely that US schools will all be fully reopened at the start of the next school year," they said in a note.

"However, we still see a good prospect of those operations returning to close to their normal profit run rate before the end of this year. Other parts of the group that are more dependent on discretionary travel, such as the long distance coach operations in the UK and Spain, are likely to take longer to stage a full recovery."

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