TIDMNEX
RNS Number : 0416F
National Express Group PLC
12 November 2020
Trading Update
12 November 2020
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES
OF EU REGULATION 596/2014.
Overview
-- The trend of improving revenue performance has continued,
with around 70% of last year's revenue secured in October compared
to around 60% in August.
-- We continue to generate positive EBITDA, with October
delivering the highest monthly total in 2020 to date.
-- We retain significant liquidity and expect to close the year
with around GBP1.5 billion in cash and undrawn committed
facilities.
-- Our reputation for operational excellence endures during the
pandemic, with further contract wins in recent weeks:
o Further success in Portugal, where we have been provisionally
awarded a 200 urban bus contract in Porto, complementing our
previously announced 240 bus contract in Lisbon;
o In the UK we have won: a major employee shuttle contract; and,
our first accessible transport contracts outside the West
Midlands.
Group financial position
-- With greater clarity on school start-up in North America and
the latest government lockdown policies and related support, we
reinstate guidance with normalised EBITDA forecast at between
GBP170-190 million for 2020:
o Despite our progress, the pace of our recovery has been slower
because of the impact of the second wave of infections and the
associated lockdowns;
o However, even at the bottom of this range, we would pass all
covenant tests at 31 December 2020 with ample headroom.
-- We have passed the seasonal third quarter 'peak debt' (where
we incur the costs of North American School Bus start-up with
limited revenue) and generated positive EBITDA and cash flow in
October which we expect to continue throughout the balance of the
year.
-- We expect to close the year with around GBP1.5 billion in
cash and undrawn committed facilities.
-- Fitch recently reaffirmed our investment grade rating (BBB)
whilst maintaining the outlook at negative in line with their views
on the transport sector as a whole.
Divisional operating highlights
ALSA
-- ALSA continues to benefit from its strong customer
relationships and contractual protections, such as no revenue risk
in over 40% of contracts (principally 60% of regional and 100% of
urban). This figure will grow closer to 50% by the end of 2021 as
recent new contracts are mobilised:
o In October our urban services proved their on-going
resilience, with 60% patronage on 100% of mileage.
-- Beyond the contracts with revenue protection, we have seen
the recent tightening of lockdown policies affect Spanish long haul
and regional coach passenger numbers, which are currently running
at 15-20% of last year:
o Before this recent second wave tightening, across all of our
services we saw a strong return of demand, with patronage at 65% of
last year in September;
o We have liaised closely with customers and reduced service
in-line with lower demand, with our long haul coach services now
running at 20% of their pre-Covid level ;
o We continue to use the Spanish government's ERTE furlough
scheme to protect cash flow. This scheme has been extended into
2021, allowing us to continue varying employee numbers in-line with
changes in customer demand.
-- In Morocco, we have seen a rapid bounce back in passenger
numbers in four of our six contracts. In Casablanca and Rabat - our
newest and largest contracts - patronage is running higher than the
same period last year:
o We continue to work closely with customers and local
authorities to manage contract terms and costs.
-- We have been provisionally awarded a seven year, over GBP112
million revenue, contract to operate 200 urban buses in Porto. This
is a 'gross cost plus' contract, with a small proportion of our
income dependent on the level of passenger revenue secured. This
complements our previous success in Lisbon and we expect that both
contracts will start next year.
North America
-- We are currently operating services on 75% of our school bus
routes, either through full 'traditional' (five days-a-week) or
'hybrid' (a mix of in-school and at home learning)
arrangements:
o This situation appears to have stabilised with limited
expectations of the remaining 25% of routes returning to school in
2020.
-- Working closely with customers, we have secured around 80% of
our pre-Covid school bus revenue:
o We continue to closely manage costs including laying off
drivers where customers have not provided payment. We expect the
majority of these lay-offs to be temporary, with employees recalled
once service resumes.
-- In both our Transit and Shuttles businesses, we maintain
similar positions to that set out in our 24 September 2020 Trading
Update:
o Transit continues to secure between 65% and 80% of pre-Covid
revenue;
o In Shuttle our particularly strong customer relationships
continue to underpin revenue collection, at around 80% of pre-Covid
levels.
UK
-- Our UK bus business continues to benefit from government
support, fully underwriting the cost of operating service.
Patronage levels have also proved resilient:
o As we entered the second lockdown in England, West Midlands
bus continued to operate 103% of last year's service, with around
60% of the patronage;
o In Dundee - where a tiered system remains in place - we are
operating around 90% of last year's service, with around 60% of the
patronage;
o National Express Accessible Transport has won two contracts in
Warwickshire, broadening out from its West Midlands base.
-- From 9 November we temporarily reduced our UK coach network
to around 9% of last year's service, reflecting the restrictions of
England's second lockdown:
o To further protect cash flow, we have again placed a large
majority of staff on the government furlough scheme;
o Before the latest round of restrictions, demand had returned
encouragingly with 51% of service operating at nearly 80% occupancy
rate;
o National Express Transport Solutions has recently won a major
employee shuttle contract worth GBP5 million revenue during the
remaining months of 2020.
Ignacio Garat, Group Chief Executive, said:
"In my first weeks in the Group, I have been struck both by my
colleagues' professionalism, and by the resilience of our leading
portfolio of businesses. The positive vaccine news of the last few
days may signal a faster service recovery in the medium term than
we had hitherto envisaged. Nonetheless, these remain difficult
times for the public transport sector, at least in the short term.
I am convinced, however, that National Express will continue to
weather the challenges we face and has strong foundations in place
to prosper once the pandemic is over.
"I am pleased by the strength of our relationships with
customers and governments across the Group. This is reflected in
the amount of support we have and continue to receive. We will
continue to proactively engage customers and relevant authorities
to navigate the challenges the pandemic presents. Alongside this,
we will continue to closely and carefully manage costs and remain
very disciplined in the returns we seek on investment, as part of
our broader focus on maintaining the Group's financial
position.
"National Express will retain its focus on safety, operational
excellence and being an employer of choice, values that have
underpinned its success in recent years. Fundamentally, National
Express is a service company and we will redouble our efforts and
programmes to make sure every customer's experience is outstanding.
These attributes will help us navigate the pandemic and ensure
National Express retains and extends its market leading position
and drive our future growth."
About National Express
National Express is a leading mass transit provider with bus,
coach and rail services in the UK, North America, continental
Europe, North Africa, and the Middle East.
Enquiries
National Express Group PLC
Chris Davies, Group Finance Director 0121 460 8655
Anthony Vigor, Director of Policy and External
Affairs 07767 425822
Louise Richardson, Head of Investor Relations 07827 807766
Maitland/AMO
Neil Bennett 020 7379 5151
James McFarlane 07584 142 665
Notes
Legal Entity Identifier: 213800A8IQEMY8PA5X34
Cautionary statement
Information set forth in this announcement may contain certain
'forward-looking statements' with respect to National Express Group
PLC ('Company' or 'Group') and the Group's financial condition,
results of its operations and business, and certain plans,
strategy, objectives, goals and expectations with respect to these
items and the economies and markets in which the Group
operates.
Forward-looking statements are sometimes, but not always,
identified by their use of a date in the future or such words as
'anticipates', 'aims', 'due', 'could', 'may', 'should', 'will',
'would', 'expects', 'believes', 'intends', 'plans', 'targets',
'goal' or 'estimates' or, in each case, their negative or other
variations or comparable terminology. Forward-looking statements
are not guarantees of future performance. By their very nature,
forward-looking statements are inherently unpredictable,
speculative and involve risk and uncertainty because they relate to
events and depend on circumstances that will occur in the future.
Many of these assumptions, risks and uncertainties relate to
factors that are beyond the Group's ability to control or estimate
precisely. There are a number of such factors that could cause
actual results and developments to differ materially from those
expressed or implied by these forward-looking statements. These
factors include, but are not limited to, changes in the political
conditions, economies and markets in which the Group operates
(including the outcome of the negotiations to leave the EU);
changes in the legal, regulatory and
competition frameworks in which the Group operates; changes in
the markets from which the Group raises finance; the impact of
legal or other proceedings against or which affect the Group;
changes in accounting practices and interpretation of accounting
standards under IFRS, changes in interest and exchange rates and
the evolution of the Covid-19 pandemic and government and public
health body measures taken in response to it and passenger travel
habits exhibited in response to it.
Any forward-looking statements made in this announcement, or
made subsequently, which are attributable to the Company or any
other member of the Group, or persons acting on their behalf, are
expressly qualified in their entirety by the factors referred to
above. Each forward-looking statement speaks only as of the date it
is made. Except as required by its legal or statutory obligations,
the Company does not intend to update any forward-looking
statements.
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