Rail 'renaissance' for Stagecoach

Stagecoach says increased investment in services is paying dividends

Rail and bus firm Stagecoach has hailed a "fundamental shift" in attitudes to public transport as it reported a healthy jump in profits.

It said growth in passenger numbers on its rail and bus services was due, in part, to growing concerns about congestion and climate change.

Pre-tax profits for the year to 30 April rose from £162m to £174m as sales increased by 16% to £1.76bn.

Its rail franchises include South Western and East Midlands Trains.

Congestion issue

Stagecoach said the UK rail sector was undergoing a "renaissance" due to increased demand, investment and more effective marketing.

We believe the combination of increased road congestion, rising public concern about environmental matters and higher fuel prices will further boost demand for public transport Robert Speirs, Stagecoach chairman See Stagecoach shares

Sales at its rail operations rose 36% to £777.8m during the period, while its share of profit from its Virgin Rail Group joint venture - which operates trains on the west coast mainline between London and Glasgow - rose from £13.5m to £32.2m.

But Stagecoach warned there was a "significant risk" that maintenance on the west coast line - currently being undertaken by Network Rail - would not be finished by December, potentially hampering its expansion plan.

Stagecoach said it was upbeat about current trading, despite being mindful of rising fuel costs and the impact of the economic slowdown on people's expenditure.

"We believe the combination of increased road congestion, rising public concern about environmental matters and higher fuel prices will further boost demand for public transport," said Stagecoach chairman Robert Speirs.

But Stagecoach shares fell 6% as analysts said the firm may struggle to repeat its recent performance in a tougher economic climate.