Profits at Go Ahead Group tumbled in the first half of the year as the transport group was stung by the end of its London Midland rail franchise and a poor financial performance from Govia Thameslink.
The FTSE 250 bus and train operator saw pre-tax profit fall 45% to £44.2 million in the six months to December 29, while revenue for the period grew 5% to £1.92 billion.
Profits were dragged down by the loss of London Midland franchise income, which gleaned Go Ahead £230.3 million in income in the corresponding period last year.
Go Ahead was also hit by an exceptional item of £16.8 million linked to its bus pension schemes and what boss David Brown described as “a lower result at Govia Thameslink”.
In December, Govia was hit with sanctions that saw it fork out £15 million for service improvements after a botched timetable overhaul, on top of £15 million paid out in compensation to passengers affected by the chaos.
Govia Thameslink consists of Thameslink, Great Northern, Gatwick Express and the troubled Southern franchise.
However group operating profit, Go Ahead’s preferred measure, came in ahead of expectations at £64.5 million, even though that represents a fall of more than 25%.
Mr Brown added its full-year expectations have increased, although it did not provide any figures.
He said: “I’m pleased to report that our half-year results are ahead of our expectations. Our bus operations showed resilience with profits slightly up on last year despite a challenging market environment.
“Whilst overall rail profits fell due to the end of the London Midland franchise in December 2017 and a lower result at Govia Thameslink Railway, they were ahead of expectations. Southeastern delivered good financial performance, up on last year.”
In buses, operating profit was slightly ahead of the prior year at £46.9 million, but in rail the figure fell from £40.3 million to £17.6 million.
Shares were up over 2% in morning trade on Thursday at 1,967p.