Mobico on track to recach lower end of profit guidance

(Sharecast News) - Mobico Group said in an update on Wednesday that it remains on track to meet its full-year profit guidance, despite weaker trading in the UK, as it presses ahead with a large-scale cost reduction programme and opts not to redeem its perpetual bond. The London-listed passenger transport operator reported a 5.4% year-to-date increase in group revenue for the nine months ended 30 September.

It reiterated that adjusted operating profit for 2025 would come in towards the lower end of the previously-guided £180m to £195m range.

Phil White, group executive chair, said the business was focused on improving performance and unlocking value as it undergoes a strategic overhaul.

"We continue to focus on simplifying and strengthening the group, taking decisive actions to improve operational and financial performance," he said.

"These actions include a comprehensive cost savings programme, further leveraging ALSA's best practice across the business and exploring options to monetise the assets of the UK Bus business ahead of franchising."

White added that market conditions in parts of the UK and a problematic North American contract were proving a drag.

"We are on track to deliver on our guidance for the year of adjusted operating profit in the range of £180m to £195m, albeit we expect this will be towards the lower end due to the competitive environment for UK Coach, reduced passenger numbers in UK Bus and a loss-making WeDriveU contract in WMATA," he said.

"The key priorities for our new leadership team remain strengthening the group's balance sheet and improving profitability through our strategic initiatives."

Revenue at ALSA, Mobico's Spanish and international bus division, rose 4.1% year-on-year in the third quarter, driven by strong growth in regional and urban services and a significant increase in health transport contracts in Spain.

Passenger numbers and revenues also benefited from government-backed travel initiatives.

ALSA continued its diversification, including securing an eight-year €500m joint venture contract in Saudi Arabia for park-and-ride and electric shuttle services linking Riyadh and the new city of Qiddiya.

WeDriveU revenue slipped 0.9% from a year earlier as volumes fell in Washington following new service providers entering the market, though the division won new paratransit and university shuttle contracts to mitigate the impact.

UK operations remained a weak spot, with revenue down 3.2% year-on-year.

Mobico said UK Coach revenue dropped 7.4% amid intensified competition and the exit from loss-making parts of its NXTS business, while UK Bus revenue rose 2.9% but passenger numbers declined as lower consumer confidence weighed on demand.

The company said it was preparing for the franchising of bus operations in the West Midlands between 2027 and 2029 and was considering ways to monetise related assets.

German rail revenue climbed 14.3% as operational improvements reduced penalties, although Mobico warned that uncertainty persists over government funding linked to fixed-price monthly travel tickets.

Discussions with regional transport authorities are ongoing.

Separately, Mobico said it would not exercise its voluntary option to redeem its perpetual hybrid bond on the first call date.

The coupon would reset in February based on the five-year gilt yield plus a 413.5 basis point spread, with the first payment at the higher rate due in February 2027.

At 0902 GMT, shares in Mobico Group were down 7.15% at 20.15p.

Reporting by Josh White for Sharecast.com.