National Express owner's UK sales continue to struggle after CEO's exit

Daily Mail​

19-05-2025

Mobico revenues rose at the start of this year as bumper performances across Europe and North America, offset continued weakness in the UK and Germany.
National Express's parent company said its turnover increased by 9 per cent in the quarter ending March, with revenue expanding by 13 per cent in both North America and its Spanish subsidiary ALSA.
Trading in the former territory benefited from a rise in billable hours in its WeDriveU business, as well as rate hikes and route additions in the school bus division, which Mobico recently agreed to sell.
In the latter market, the transport operator enjoyed growing passenger numbers on its long-haul and regional services, thanks somewhat to the extension of a free multi-vouchers scheme.
However, Mobico continued struggling in the UK, where bus customer volumes were flat year-on-year and the absence of train strikes led to its total coach revenue falling by 6 per cent.
It also benefited less from UK rail strikes, which helped boost demand last year.
Mobico also experienced declining turnover in its German segment as bus and coach driver shortages resulted in higher penalties from cancellations.
It comes less than three weeks after its chief executive, Ignacio Garat, resigned at the same time the firm reported its annual pre-tax losses soared more than fivefold to £609.3million.
Losses were attributed to writing off deferred tax assets, goodwill impairments and onerous contract provisions in its German business.
The Spanish-born executive has been replaced on an interim basis by executive chair Phil White, who used to run National Express Group - Mobico's former name - between 1997 and 2006.
Turnaround experience needed?
Peel Hunt analyst Alexander Paterson said Mobico 'needs to change the way it is negotiating and restructure its German rail holdings'.
He also warned Transport for West Midlands' transition to a franchising model means Mobico's UK bus business 'is likely to operate fewer routes and at lower margin than it did pre pandemic'.
He added: 'A new CEO, with experience of turnarounds in the bus and rail sector across the UK and Germ any, cannot come quickly enough.'
Interim boss White said the company's first-quarter result was 'evidence of continuing growth in demand for our services.'
He added: 'Our priority remains in strengthening our balance sheet and accelerating the pace of operational and financial improvement to drive the change that is necessary to creating a business that can take advantage of the opportunities ahead.'
Just a few days before Garat's departure, Mobico announced the agreed sale of its North American school bus division to infrastructure investor I Squared Capital for up to $608million (£457million).
The proposed price tag was far lower than many City analysts were expecting, with broker Jefferies estimating the segment could be worth as much as £1.2billion.
Mobico will use proceeds from the bus division's sale to reduce its net debts, which stood at £991.3million at the end of last year.
Mobico Group shares were 1.8 per cent down at 27.2p on late Monday afternoon, taking their losses to around 59 per cent over the past month.