Go-Ahead plummets after warning

By JIM ARMITAGE
Updated:

 

SHARES in bus and train operator Go-Ahead plummeted today as it warned of a continuing profits shortfall in the wake of 11 September and the Hatfield derailment.

The operator of Thameslink, South Central and Thames Trains said it had suffered from the downturn in the London economy, which resulted in fewer commuters using its trains.

A lack of tourists was also hitting its routes into the capital and to destinations such as Stratford-upon-Avon, Oxford and Windsor. All Go-Ahead's train companies service Gatwick airport.

To make matters worse, before the terrorist attacks Go-Ahead had invested heavily in its airport ground handling division, which has suffered severe damage from the decline in passenger numbers and, to a lesser extent, cargo. Deputy chief executive Chris Moyes admitted to a 'significant short term decline' in the business during what he described as a difficult half-year.

'Two of the three divisions have been materially impacted,' he warned, adding that this would continue to affect profits for the rest of the financial year and would pick up only when confidence improves in the global economy.

Pre-tax profits in the six months to 29 December improved modestly on the same period a year earlier, creeping up to £20.7m from £20.1m on turnover of £424.1m against £276.2m before. Shareholders will pick up a 5p interim dividend against 4.3p at the half-year stage last time.

Profits in the rail division fell from £9 million to £4.8m, although the buses operation improved from £14.8m to £17.6m.

The shares fell 50p before recovering slightly to show a drop of 37 1/2p to 550p as investors responded to the bearish outlook from the group, although Moyes insisted that today's statement did not represent a significant change in stance since a trading statement in October.

'It's not unexpected - but people don't like seeing the cold, hard print,' he said.

Passenger growth on its rail operations had been running as high as 10% in the prior six months period, giving signs of a steady improvement on the trend in previous years of 6% to 8% year-on-year. But in the last half growth fell to between 1% and 1.5%.

Go-Ahead's buses enjoyed an easing of the staff shortages in the capital as a result of Mayor Ken Livingstone's Transport for London funding bonus payments for the best drivers and conductors.

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