TIDMMCG
RNS Number : 8548P
Mobico Group PLC
12 October 2023
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
FOR IMMEDIATE RELEASE
Mobico Group PLC
Q3 Trading Update
12 October 2023
Mobico Group Plc ("Mobico" or "Group") today reports its Trading
Update for the period 1 July 2023 to 30 September 2023 ("Q3" or
"the period").
Full recovery in profitability taking longer to deliver;
decisive action being taken on our cost base and to accelerate
deleveraging
-- Group revenue growth up 10% year on year but path to
improving profitability impacted by higher costs, particularly in
the UK and in North America School Bus as a result of investment in
a strong operational school year start up
-- FY 2023 EBIT now expected to be in the range of GBP175m to GBP185m
-- Previously announced productivity and cost reduction
programme on track to deliver GBP15m in year and GBP30m annualised
savings. Actions launched to further improve cost efficiency and
expected to deliver additional GBP20m annualised savings
-- In line with the Group's disciplined capital allocation,
focus on deleveraging and enhancing growth, the Board has decided
to prepare the North America School Bus business for a potential
disposal, given its operational momentum and positive trading
trajectory
-- Decision taken to suspend FY2023 final dividend pending deleveraging progress
Ignacio Garat, Group Chief Executive, said:
"We recognise that the recovery of our profitability will take
longer than we had previously expected. That is why we are
announcing decisive actions to ensure we deliver sustainable
profitability from our growing revenue base. Whilst our belief in
the potential of the Group remains strong, we will move at greater
pace with new leadership teams in the UK and North America.
Our actions to ensure a strong North America School Bus school
year start up positions that business well for a potential disposal
which would accelerate debt reduction and increase flexibility for
growth investment. We have therefore commenced preparations for a
sale process in early 2024.
The Board is keenly aware of the importance of dividends to
shareholders and the decision to suspend the final dividend was not
taken lightly. The Board will continue to consider the dividend
position as progress is made on deleveraging."
UK & Germany
In the UK, revenue grew by 13% on Q3 2022; in Germany revenue
was down by 3%
New leadership makes immediate impact
In the UK & Germany division, Alex Jensen joined as CEO in
September with a clear remit to sharpen the division's commercial
focus. Working at pace with Alex, we have performed a rapid
assessment of that division and have identified clear areas for
improvement including: (i) better commercial scrutiny and ambition;
(ii) tighter cost control and ownership of cost reduction
initiatives; and (iii) improved allocation of capital and
resources.
UK Coach
The Scheduled Coach business continues to trade strongly, with
revenues up 26% on Q3 of the prior year, and passenger growth of
24%. Yield was 2% higher than in Q3 2022. Our capital-light network
continues to grow and is now back at 96% of pre-Covid levels. We
are seeing particularly strong growth on our core inter-city routes
and have been able to capture significant upside from the rail
strikes in the UK. Pleasingly, we continue to benefit from c.12% of
passengers who used our services on a strike day but have not
travelled with us before subsequently booking again on a non-strike
day.
The National Express Transport Solutions business ("NXTS")
addresses the private hire and contract market. A review by the new
management team has concluded that the underlying profitability of
the NXTS business (excluding rail strike impacts) is currently
below the levels required to meet our return thresholds (noting
that NXTS is more asset-intensive by nature). As a result, we will
announce today our intention to close two of the five key NXTS
depots and continue to review the ongoing return potential of the
NXTS business.
UK Bus
Bus commercial passenger volumes are tracking around 97% of 2019
levels. When compared with Q3 2022, passenger volumes were 7%
ahead, on a network that was running at 95% of Q3 2022 service
levels. UK Bus revenue growth expectations have however tempered as
growth in passenger numbers is slightly lower than previously
anticipated. The new UK leadership is developing a future multi
year fares and sustainable network strategy to drive patronage and
revenues.
The impact of the above is likely to reduce the EBIT
expectations for the UK & Germany division by between GBP15m to
GBP20m for FY 2023.
North America
North America revenues grew by 4% on Q3 2022
Following the appointment of Tim Wertner as the new CEO of North
America School Bus business, there has been a considerable focus on
driver hiring, training and retention. As a result, at the end of
September the business had successfully re-instated 97% of maximum
available routes. We have received overwhelmingly positive customer
feedback about the strength of our operational school-year start
up.
We are confident that the momentum on route reinstatement and
contract repricing will continue - we have already won one
significant new contract, and are the highest-scored bidder
recommended for another (representing about 500 routes in total),
in early wins ahead of the school-year bid season 2024/2025.
Our investment in driver recruitment has allowed us to make
significant progress in terms of route reinstatement and will
provide payback in FY24 and beyond as we capture more revenue
generating routes. Whilst direct wages are in line with
expectations training, recruitment and driver examination costs are
above what we had originally forecast. This and the remaining risks
on route recovery are expected to have an adverse impact on EBIT of
between GBP5m and GBP10m for FY23.
Shuttle and Transit passenger volumes and service levels
improving; retention of important contracts
In Shuttle and Transit, Shuttle passenger numbers were 18%
higher than in Q3 2022 with service levels 3% ahead. Transit
service levels were 16% higher than in Q3 2022. We have won a new
Paratransit contract in North Cook County and a management contract
for fixed route Urban services in Charlotte North Carolina. In
addition, we have retained a key contract with a major customer in
the San Francisco Bay area.
Year to date over two thirds of the Group's pipeline conversion
has come from the Transit & Shuttle division. The division has
nearly GBP500m of opportunities (representing approximately one
third of the Group's pipeline) and we continue to have confidence
in the attractive capital-light growth potential of this business
into the medium term.
ALSA
Alsa has delivered another strong quarter with revenue up 16% on
Q3 2022
In Spain, our Long Haul business continues to trade well,
boosted by the impact of the 'free travel pass' initiative in Spain
and a strong holiday period. Passenger volumes were up 29%, yield
9% higher and occupancy up 4 percentage points, all compared with
Q3 2022.
Our Regional and Urban operations continue to grow with
passenger numbers up 22% and 25%, respectively - when compared to
Q3 2022. In our International business, we continue to mobilise our
Porto contract in Portugal, with operations commencing in November
this year, and we have won a new Urban Bus contract in Geneva,
expanding our existing multi-modal hub there.
In Morocco, our priority remains to support local communities as
much as we can in response to the tragedy caused by earthquakes in
the region. That support did involve some costs (including free
travel) and our largely contracted business has suffered a
temporary decline in revenues of c.5%.
Strategic decision taken to prepare the North America School Bus
business for disposal
In line with the Group's commitment to disciplined capital
allocation and deleveraging as well as its focus on future
return-enhancing growth, the Board has undertaken a strategic
review of the North America School Bus business. Whilst the Board
believes that that business is now strongly positioned for
continued recovery and long-term growth, it has also concluded that
the demand for high quality, infrastructure-like businesses
presents a potentially compelling opportunity to deliver
shareholder value through a potential disposal. Such a disposal
would accelerate our deleveraging whilst enhancing the Group's
financial flexibility to focus on opportunities with higher return
potential. As a result, the Board believes that now is the
opportune time to consider such a disposal and has therefore
appointed advisers to prepare the North America School Bus business
for sale, with an intention to commence a sale process in early
2024. Further updates will be given as and when appropriate.
The information contained within this announcement is deemed by
Mobico to constitute inside information as stipulated under the
Market Abuse Regulation (EU) No.596/2014 as it forms part of
domestic law of the United Kingdom by virtue of the European Union
(Withdrawal) Act 2018. By the publication of this announcement via
a Regulatory Information Service, this inside information is now
considered to be in the public domain.
The person responsible for arranging for the release of this
announcement on behalf of Mobico is Simon Callander, General
Counsel and Company Secretary.
Enquiries
Mobico Group PLC
James Stamp, Chief Financial Officer 0121 803 8820
John Dean, Investor Relations Director
Headland
Stephen Malthouse 07734 956201
Matt Denham 07551 825496
About Mobico
Mobico 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
Classification: 2.2 for the purposes of DTR 6 Annex 1
Forward looking statements and other important information
This document contains forward-looking statements with respect
to the financial condition, results and business of Mobico Group
PLC. By their nature, forward-looking statements involve risk and
uncertainty and there may be subsequent variations to estimates.
Mobico 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, Mobico 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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END
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