Go-Ahead Group first half in line, FY on track

20th Feb 2014 09:21

Transport group Go-Ahead reported in-line half-year figures and said expectations for the full-year remained unchanged. Pre-tax profit totalled £40.3m (2013 H1: £30.8m) on revenue of £1,370.0m (2013 H1: £1,296.6), while the operating profit margin climbed to 3.7% from 3.2% a year earlier. The dividend was maintained at 25.5p. Divisionally, the company saw growth across all areas of its business. Its core Bus division performed "very well", with operating profit up 14.7% to £40.6m from £35.4m year-on-year. It is on track to achieve its Bus operating profit target of £100m by 2015/16. In Rail, profitability improved year-on-year with operating profit in the first half of the year totalling £10.5m (2013 H1: £6.7m). The division is not expected to generate material profits in the second half of the year as the premium profile becomes more stretching and an unprofitable seven-month extension period of the Southeastern franchise begins.Looking ahead, the group's full-year expectations remained unchanged, with Bus expected to deliver a similar performance in the second half. David Brown, Group Chief Executive, said: "We maintain our long-term commitment to rail and were pleased to have submitted our bids for the Thameslink and Crossrail franchise competitions during the period."With record passenger numbers, effective cash management and a strong balance sheet, Go-Ahead is in good shape with excellent growth prospects."Broker comment broadly positive Broker Jefferies reiterated its 'buy' rating on the stock, saying "the real positive in this update is that the bus profit plan continues to develop to target". It added: "Although management describe its full-year expectations as unchanged, consensus 2014 forecasts may see some technical upside pressure driven by rail and the new 2014 tax rate guidance." For its part, Investec gave a 'hold' recommendation, with Analyst Gert Zonneveld saying the numbers were ahead of its expectations due to better rail earnings. "We expect the share price to be supported by an attractive and sustainable dividend yield and likely rail franchise wins. We increase our target price to 2,000p but retain our 'hold' recommendation," he added. NR