Stagecoach Group PLC (LON:SGC) said it expects strong support from the government in promoting public transport for environmental reasons as it posted a small interim profit.
The bus operator said car trips in the UK during October 2020 were at 80% to 90% of pre-coronavirus pandemic levels despite continuing restrictions, meaning people continue to prefer private transport in the short-term to avoid contact with others.
In the six months to October 31, 2020, Stagecoach’s adjusted profit before tax collapsed by 99% to £400,000 while revenue dropped by 57% to £454mln as the company was hit by travel restrictions.
The firm said the regional bus segment has seen significant recovery in patronage and commercial revenue since May and it is now operating at around 91% of prior year vehicle mileage, with commercial sales having recovered to around 54% compared to 2019 levels.
For London buses, however, contract payments are now at normal levels with full service restored, the group added.
In rail, the Sheffield Supertram business is receiving government payments for continuing the essential tram services it provides while Stagecoach continues to unwind its former train operating companies.
“A breakeven result was not as bad as expected, with both bus divisions profitable. There was an inevitable impact from the pandemic on Regional Bus passenger volumes, but these were mitigated by ongoing government support for the industry,” analysts at Liberum said.
“The current valuation continues to imply a long-term impact on earnings that we consider to be excessively pessimistic.”
Shares jumped 6% to 78.25p early on Wednesday.
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