Bus profits boost for Stagecoach

Stagecoach operates 7,000 buses across the UK

Transport group Stagecoach has reported growth in profits, helped by a strong performance from its bus division.

It made a pre-tax profit of £196.4m in the year to the end of April, up 2% from the previous year.

It owns Megabus and Oxford Tube coach service, and South West and East Midlands train franchises as well as half of Virgin Rail.

It said its UK rail division would make a big loss in 2010 to 2011 if a dispute over South West Trains was not sorted.

The row - about when the government should provide compensation for a train franchisee's losses - has gone to arbitration.

The company also said that it was not expecting to see much growth in the UK rail division in the coming year as the recession hit demand for commuter and leisure travel.

"While our rail operations are more sensitive to the macroeconomic cycle, we have acted quickly to protect our businesses," said Stagecoach chief executive Brian Souter.

"We have delivered a major cost reduction programme at our rail franchises and are implementing measures to protect passenger revenue and attract new customers to the rail network."

Analysts at Panmure Gordon said the results were better than it had expected and highlighted a strong performance from the bus division.