Mobico Group Posts Profit Jump, Initiates Sale of North American School Bus Business

British transport company Mobico Group, formerly known as National Express, reported a significant jump in its first-half profit, driven by a combination of factors including passenger growth, higher pricing, and cost reduction initiatives. The company also announced that it has initiated the sale process for its North American school bus business, a move aimed at further reducing debt and streamlining its operations.

Mobico's adjusted operating profit surged by 28.1% to £25.4 million for the six months ended June 30, a substantial improvement from the previous year's £19.8 million. This positive performance was attributed to a strong showing by its European subsidiary, ALSA, which reported a record 43.2% increase in operating profit to £82.5 million.

The company's decision to divest its North American school bus business reflects a strategic shift towards reducing debt and focusing on core operations. Mobico has been grappling with rising costs and operational challenges in the North American school bus market, making it a less attractive segment for the company.

Key Highlights of Mobico's First-Half Results

Robust Revenue Growth

Mobico's total revenue for the first half of 2024 rose by 7.6% at constant exchange rates to £1.65 billion, compared to £1.57 billion in the same period last year. The company attributed this growth to strong performances across its various business units, including continued passenger growth in most areas and the positive impact of price increases.

Strategic Debt Reduction Initiatives

Despite the profit surge, Mobico remained focused on reducing its debt levels. The company did not declare an interim dividend for the period, reflecting its ongoing commitment to deleveraging. In addition to the sale of its North American school bus business, Mobico has identified other organic debt reduction initiatives that are expected to deliver results in the second half of the year.

Maintaining Full-Year Guidance

Despite the sale of its North American school bus business and its debt reduction efforts, Mobico maintained its full-year guidance for adjusted operating profit, projecting it to be between £185 million and £205 million. The company expressed confidence in its ability to achieve these targets, citing its progress in cost reduction initiatives and the sustained growth across its various business segments.

The Future of Mobico

The sale of Mobico's North American school bus business marks a significant strategic move for the company. This decision, coupled with the company's commitment to reducing debt and focusing on its core operations, suggests a clear path towards a more streamlined and profitable future. As Mobico continues to navigate the evolving transportation landscape, its ability to capitalize on growth opportunities while maintaining financial stability will be crucial for its long-term success.

Mobico's Road Ahead: A Journey Towards Streamlined Growth

Mobico's recent performance underscores its resilience and adaptability in a dynamic market. The company's decision to divest its North American school bus business, while simultaneously focusing on debt reduction, signifies a proactive approach to its financial future. As Mobico continues to execute its strategic plan, its commitment to delivering sustainable growth and value for shareholders remains a key driver of its future success.