National Express to drive into Europe

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The Independent Online

National Express, the transport group, plans to take its expansion into continental Europe for the first time.

National Express, the transport group, plans to take its expansion into continental Europe for the first time.

Reporting full-year results for 1999, Phil White, the chief executive, said yesterday that having achieved critical mass in the United States and Australia, the company was now looking towards Europe.

"We doing a recce at the moment of possibilities in Western Europe, but we are not in talks with anyone as yet. We would want to take a large stake in a partner there," said Mr White.

National Express spent a total of £295m last year expanding into the US and Australia, and now has 25 per cent of its operations abroad.

The company, which operates buses, coaches, trains and airports, said that its banking facilities leave it with up to £500m for further acquisitions.

However, analysts pointed out that opportunities on the Continent were hard to come by, because of stringent regulations and large-scale state ownership of companies in many states.

The company reported pre-tax profits of £107.4m last year, up from £97.7m in 1998, before goodwill and exceptional items. Group turnover was up by 12 per cent at £1.48bn. The total dividend of 18.2p for the year, up by 14 per cent, is payable from normalised earnings of 69.7p a share, up from 63.1p.

The American and Australian interests produced operating profits of £13.7m on turnover of £156.4m.

Matthew Stainer, an analyst at SG Securities, said: "They've done what they said they'd do, but it is difficult to see what would turn around sentiment in investors' minds." The company's shares yesterday edged up 4p to close at 575p, having dropped from 1,231.5p over the last year.

National Express reported more than 660 million passenger journeys last year, a 26 per cent increase on levels in 1998. However, growth in the numbers of bus passengers was just 1 per cent.

The company said it was looking to increase bus passengers in the UK by introducing the first high-capacity "Bendi-Buses" and double deckers and by targeting congestion hotspots. The UK bus business returned operating profits of £47.6m, up from £43.8m, on turnover of £196.4m, from £190.1m.

The company's five rail franchises produced turnover of £921.8m, up from £918m. However, excluding the subsidy from the Government, turnover was 8 per cent higher at £453.6m. Rail operating profits increased by £8 per cent to £28m.

Ongoing businesses in the coach division saw turnover rise by 3 per cent to £168.2m on operating profit of £11m, up from £10.3m previously. The company said that direct sales through call centres and over the internet now accounted for 17 per cent of coach-ticket sales.

In the airports business, National Express said that the loss of revenues from duty-free sales in the second half of last year had knocked £1m off operating profits, in at £12.9m, up from £12.5m. Airport turnover was 4 per cent up at £33.9m.