Shares in National Express owner jump as it starts sale of US school bus business
The owner of National Express has revealed it has begun the sale of its North American school bus business in an effort to reduce its £1.2bn debt, sending its shares sharply higher.
The share price of Mobico, which changed its name from National Express Group in June 2023, jumped by more than 20% after markets opened on Wednesday, before settling at 14% up at 66p by mid-morning.
Mobico is best known for its National Express brand in the UK, where it holds the largest market share of long-haul coach transport. It also runs train and bus services in 12 countries, including Spain, Portugal, Morocco and Switzerland, plus a German rail division.
As well as announcing the start of the formal sale process for the North American business, Mobico also reported a near 24% rise in half-year operating profit to £71.2m.
Its chief executive, Ignacio Garat, said the sale would help Mobico achieve its priority of addressing its borrowings, adding that it had identified other debt-reduction initiatives for the second half of the year.
Garat said the company remained confident of achieving a full-year adjusted operating profit of between £185m and £205m.
Its North American bus company is one of the biggest school bus providers in the US. It operates in 33 states as well as in two Canadian provinces. However, it has struggled in recent years because of staff shortages and inflationary pressures.
Last October, Mobico announced it was looking to sell the business as a key part of its turnaround strategy after it issued a profit warning and suspended dividends.
Despite recent struggles, the US businesses made an adjusted operating profit of £21.4m for the first half of this year, up 55% on last year, as it gained a number of routes.
Debt at Mobico has grown in recent years as the company sustained a string of losses after the coronavirus pandemic.
In April, it reported a pre-tax loss of £98.3m, which was an improvement on the £335m reported in 2022.
These have contributed to its share price falling by 65% in two years, from 186p in mid-August 2022.
In an update on Wednesday, Garat said: “Mobico has delivered a good performance in the first half of 2024, with continuing positive passenger demand and revenue growth.
“We have retained, won and successfully mobilised significant new business across different parts of the group and our cost-reduction initiatives have delivered savings slightly earlier than expected.”