Economy

Southern Rail turmoil hits Go-Ahead profits

Southern Rail turmoil hits Go-Ahead profits”

Earnings slumped 16.1% in its rail arm to £59.9 million, with the ongoing industrial action and service woes on Southern seeing GTR suffer a 3.9% drop in passenger journeys and a 4.1% drop in passenger revenues.

Bus profits were broadly flat at 90.7m, as London profitability grew but regional operations fell.

Pre-tax profit dropped 5.7% to £136.8mln from £145.0mln the prior year.

For the year to 31 July 2017, the Newcastle-based group reported revenue of £3.48bn, which is up from £3.36bn the previous year.

As a result, Go-Ahead has reduced its expectations for full-year profit in the rail division.

Brown said: "Our global development strategy is progressing well and, with five contracts won in three new markets, today we announce a target of 15% to 20% of Group profit to be generated from worldwide operations within five years".

Go-Ahead's chief executive, David Brown, said: "We apologise to our Southern passengers who have been inconvenienced for many months by disruption caused by industrial relations issues".

"We will continue to bid in markets that match our investment criteria, and where we can use our skills and experience to improve local transport services". Govia, the company's venture with Keolis, lost the contract to a Dutch Japanese joint venture last month after running the network in central England for 10 years.

"While it was disappointing to be unsuccessful in our bid to retain London Midland, progress in our global strategy will see some of the lost revenue from the franchise replaced with contracts in the targeted markets of Singapore bus, Dublin bus and German rail", CEO David Brown said in a statement. Southeastern saw a decrease in passenger numbers during in the year with Go-Ahead blaming changes in travel patterns due to "economic conditions".

Go-Ahead expect margins over the life of the GTR contract to be between 0.75% and 1.5%. Basic earnings per share decreased to 207.7 pence from 218.2 pence past year.

But it said the £13.4 million penalty imposed by the Government, which will see it fund 50 non-board supervisors and other improvement projects, had helped resolve "financial uncertainty" in the division.

Shares in Go-Ahead were trading down 3.9% at 1,684.00 pence early Thursday following the news, one of the worst performers in the FTSE 250.



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