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Summary
- Stagecoach Group Plc has reported a decline of 43.2% in its revenue during H1 FY21.
- The UK Bus segment has delivered strong revenue and operating profit growth of 4.9% and 80.4%, respectively.
- The net debt to EBITDA ratio of the Company was 1.8x as of 31 October 2020.
Stagecoach Group Plc (LON:SGC) is the FTSE All-share listed consumer stock. The Company is a well-established public transport player. Shares of SGC were down by close to 6.55% from the last closing price (as on 11 December 2020, before the market close at 08:35 AM GMT).
Stagecoach Group Plc is the FTSE All-Share listed UK public transport company, which deals with multi-modal Transport, with its operations in Wales, Scotland and England. The Company has a team of around 24,000 people and consists of 8,300 buses, coaches and trams.
Public Transport Industry update
Public Transport plays a significant role, mostly in developing nations due to their high population. The public transport market includes Bus, Trains, Regional Taxi, Trams and Metro. The leading market for this industry is in the Asia Pacific. The main driving factors are the rising urbanization and growing population. The industry had an adverse impact due to Covid-19 pandemic as social distancing norms have developed fear kind of situation at the global level. However, the industry has bright long term prospects.
H1 FY21 results (ended 31 October 2020) as reported on 09 December 2020.
(Source: Company result)
- The Company has reported a decline of 43.2% in revenue to £454.6 million during H1 FY21 ended on 31 October 2020 due to reduced demand for regional bus and tram services.
- Similarly, the adjusted operating profit also went down from £79.6 million during H1 FY20 to £16.1 million for H1 FY21 due to adverse effect of Covid-19 pandemic.
- The adjusted earning per share also dropped to 0.1 pence per share during H1 FY21 due to expiry of rail franchises.
- The Company has not declared any interim dividend due to continuing uncertainties.
- The Company has strengthened its balance by reducing the net debt from £352.1 million as of 02 May 2020 to £310.8 million as of 31 October 2020.
- The Company has significant available liquidity of £850.0 million of undrawn committed banking facilities and cash deposits.
- The net debt to EBITDA ratio of the Company was 1.8x as of 31 October 2020.
Segmental results
UK Bus (regional operations)
(Source: Company result)
The revenue and operating profit went down for this business segment by 39.2% and 84.1%, respectively during H1 FY21 due to weak level of demand. However, the patronage and commercial revenue have now recovered from Covid-19 levels and reached at 47% and 54%, respectively, of the prior year levels.
UK Bus (London)
(Source: Company result)
The UK Bus segment has delivered strong revenue and operating profit growth of 4.9% and 80.4%, respectively during H1 FY21 relative to the equivalent period of the prior year driven by the benefit of the new contract won during its prior year, partly offset by the reductions in vehicle mileage
Recent Updates
20 November 2020: Greater Manchester bus reform.
On 20 November 2020, the Company has updated regarding the announcement made by Greater Manchester Combined Authority ("GMCA") for the assessment of its previously announced bus reform proposals.
16 November 2020: Covenant Waivers.
On 16 November 2020, the Company has updated regarding an extension to the period of time covered by waivers of bank covenants. The Company has already agreed on covenant waivers of the periods ending on 31 October 2020 and 31 May 2021 with the leading banks expiring in March 2025. The covenant waivers for the period ending 31 October 2021 is also agreed with the same banks.
Share Price Performance Analysis of Stagecoach Group Plc
(Source: EODHD/Others, chart created by Kalkine group)
Shares of Stagecoach Group Plc were trading at GBX 74.15 and were down by close to 6.55% against the previous closing price as on 11 December 2020, (before the market close at 08:35 AM GMT). SGC's 52-week High and Low were GBX 166.80 and GBX 32.28, respectively. Stagecoach Group Plc had a market capitalization of around £437.12 million.
Business Outlook
The Company has completed its 40 years of operations this year, and it will continue to connect people and places. The Company is already in discussion with the UK Department for Transport regarding a transformational way to deliver the regional bus services which would enable safety against the headwinds of Covid-19 pandemic. The Company is a part of London Stock Exchange Green Economy Mark and had MSCI ESG “A” rating reaffirmed in 2020. The public transport connections will play a prominent role in developing a green economy and work towards the safety and well-being of the people.
The usage of cars in the UK as a percentage of pre-covid levels is well ahead of the usage of public transport vehicles. The car trips during October 2020 was approximately 80% to 90% of pre-covid levels despite restrictions due to government-imposed lockdown, indicating an increasing desire to travel. The headwinds might stay for the short term. and it will take a while for the people to escape from the fear of the pandemic and continue with the resumption of usual public transport.
