Go-Ahead Group Plc. (GOG.L) Thursday said in a trading update that its expectations for the full year are unchanged.
David Brown, Group Chief Executive, said, "The overall trading performance of both our bus and rail businesses has been satisfactory and our expectations for the full year remain unchanged."
In the Bus division, regional revenue growth slowed in the third quarter due to the lapping of contract gains in the same period last year. Passenger journey growth continued to slow, with ongoing economic weakness in the north east affecting operations, and roadworks in Oxford and Brighton significantly
impacting services in those areas.
Growth in London bus revenue slowed and mileage declined due to the timing of known contract losses. Further, some revenue was lost as a result of strike action early in the quarter, impacting profitability by around 1 million pounds.
The company also has a rail division which operates the GTR, Southern (including Gatwick Express), Southeastern and London Midland franchises through its 65 percent owned subsidiary Govia.
Southern has performed in line with the company's expectations, and performance in the Southeastern franchise continues to be better than anticipated. London Midland also continues in line with expectations.
GTR has faced inherited long term operational challenges since the franchise began in September 2014. Additionally, the operating network has changed compared to what was anticipated in the bid, resulting in incremental costs.
As a result of these changes, GTR will employ the normal industry contract remedies to help mitigate these costs over time. This may lead to lower margins in the short term ,but Go-Ahead believes that any shortfall in profit is expected to be recoverable over the life of the franchise.
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