Go-Ahead shares go off track as strikes hit profit hopes

Go-Ahead’s rail revenues are up 6.2% this year, but its rail division will not make as much money as it had expected
Thameslink Trains
Lucy Tobin14 June 2016

Shares in Go-Ahead, the transport giant which runs the country’s worst-performing rail franchise, sunk 10% earlier when it warned its rail division wouldn’t make as much money as it had expected.

Delay-struck commuters on its strike-ridden Southern services will be incensed that Go-Ahead’s rail revenues are up 6.2% this year and City analysts still reckon Go-Ahead will hit a pre-tax profit of £100 million for the year to July.

But boss David Brown said the impact of major strikes meant the company was having to “invest in additional resources to deliver the best possible service to its customers in a very challenging operational and industrial relations environment”.

That is hitting margins, which are now pencilled in for around 1.5%, half the 3% Go-Ahead had previously advised the City, sending the shares down 235p to 2198p.

Govia Thameslink Railway, of which Go-Ahead owns 65% with France’s state-backed Keolis owning the rest, includes the Thameslink, Great Northern and Gatwick Express routes as well as Southern.

Their better performances and higher passenger revenues at the Southeastern and London Midland rail franchises fuelled analysts’ decisions to leave profit expectations unchanged.

Southern commuters were enraged by yesterday’s revelation that boss Brown was paid £2.16 million in 2015, despite GTR being the least reliable franchise in England and Wales.

They will be further annoyed by Brown’s comment that Go-Ahead’s 2015-16 financial year “will represent another year of strong profit growth”.

FirstGroup, the rival transport firm which lost the Thameslink contract as well as ScotRail, still grew annual pre-tax profit by 7.3% to £113.5 million. Firstgroup also failed at tenders for new franchises including the East Coast and West Coast mainlines. Revenue at its UK rail division slumped to £1.3 billion in the year to April compared with £2.2 billion 12 months earlier.

Create a FREE account to continue reading

eros

Registration is a free and easy way to support our journalism.

Join our community where you can: comment on stories; sign up to newsletters; enter competitions and access content on our app.

Your email address

Must be at least 6 characters, include an upper and lower case character and a number

You must be at least 18 years old to create an account

* Required fields

Already have an account? SIGN IN

By clicking Sign up you confirm that your data has been entered correctly and you have read and agree to our Terms of use , Cookie policy and Privacy notice .

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged in

MORE ABOUT