By Rhys Jones
LONDON (Reuters UK) - Bus and rail operator Stagecoach (SGC) said revenue growth remained constrained and conditions were tough across the group, although profitability since May was in line with expectations.
Like-for-like revenues at its British rail business, which includes London commuter franchise South West Trains, grew 1.7 percent in the 24 weeks to October 18, up from a 0.9 percent rise in the three months to end-July.
Underlying sales at Virgin Rail jumped 6.9 percent, up from a 1.7 percent increase in the previous 12 weeks, Stagecoach said on Tuesday.
Sales growth at its UK bus unit was flat, up 4.3 percent during the period, while its North American coaches operation posted a 6.8 percent decline in revenues in the third quarter, compared to a 5.8 percent slump in the three months to end-July.
Rival British transport groups Go-Ahead (GOG) and Arrvia (ARI) last week said revenues were growing steadily across their bus and rail operations.
"Although rail revenue growth appears, in our view, to be showing tentative signs of recovery, management highlights that trading conditions remain challenging, especially in rail," said Arbuthnot analyst Gerald Khoo.
"Management continues to target cost savings across the group, and UK bus benefits from a robust and flexible business model that should trade well through the economic cycle."
Shares in Stagecoach, which have fallen 9 percent in the last month, were 2 percent down at 140.4 pence by 0940 GMT, valuing the business at around 1 billion pounds.
The company is expected to report an average pretax profit of 127.17 million pounds for the year to the end of April 2010, according to a Thomson Reuters I/B/E/S poll of 13 analysts.
Stagecoach, which was last week rebuffed in its attempt to buy rival National Express (NEX), said its financial position remains strong and that it has significant, undrawn bank facilities.
(Editing by Victoria Bryan and Mike Nesbit)
