Transport group Go-Ahead has hiked its full-year profit outlook as it said it was emerging from “challenging” times after the pandemic and a rail franchise scandal.
The firm posted underlying operating profits of £42.6 million for the six months to January 1, which was down 24.5% but 17.7% higher on a like-for-like basis and with one-off boosts from a year earlier stripped out.
It said demand for regional bus services was recovering after being hit hard by the pandemic, now standing at more than 80% of pre-Covid levels.
Go-Ahead added that, with trading also “robust” in the second half of its year so far, it expects full-year profits to come in ahead of previous forecasts.
The figures follow a tough past couple of years for Go-Ahead as lockdowns hammered the transport sector and after the group’s Govia joint venture was stripped of the Southeastern rail franchise last autumn for a serious breach of contract.
Govia – a tie-up between Go-Ahead and French firm Keolis – was fined £23.5 million over the scandal, which came on top of £64 million the Department for Transport is recovering from the group in relation to the breach of its franchise and other costs.
The saga led to the firm’s shares being suspended from the London Stock Exchange as accountants needed more time to work out what impact the problems would have on the company, causing a lengthy delay to its 2020-21 results.
Christian Schreyer, group chief executive of Go-Ahead, said: “These results demonstrate an encouraging performance as Go-Ahead emerges from a challenging period.”
He said the past two years during the pandemic had been “the most difficult ever experienced” by the transport industry.
But he added: “We’re looking ahead with confidence, with a new leadership team in place and a new strategy to improve the efficiency of our bus and rail companies.”
Interims results showed pre-tax profits fell to £50.1 million from £50.3 million a year earlier, but this includes a £13 million credit largely relating to the Southeastern penalty, which came in below the £30 million set aside by the group.
Mr Schreyer recently pledged to resume payouts to shareholders and increase earnings as part of a business overhaul.
The firm said it would return to its pre-pandemic shareholder dividend policy in 2021-22, turn around underperforming businesses and expand into growth areas following a group-wide business review.
It wants to look at possible acquisitions in international bus markets as well as explore new urban so-called mass transit modes, such as metro, light rail and bus rapid transit.
The plan aims to increase annual revenues by about 30% to £4 billion and operating profits to at least £150 million.