North America and Morocco drive up sales at National Express

National Express looked to North America, Spain and Morocco for growth as it controlled rising wages for school bus drivers in the US, helping to drive up margins.

The bus and coach operator said revenue grew 14.5%, helped by changes in exchange rates. Operating profit grew 14.3%, while margins also rose.

It comes a day after the company announced a major new contract that doubles the size of its operations in Morocco, making it an even more important market, with more National Express buses now on Moroccan than UK streets.

The firm will operate 700 buses in Casablanca for up to 15 years, bringing in a billion euros (£870 million) in revenue over the period.

Before the deal was announced revenues had grown 8.5% across Morocco and Spain in the most recent three months. The company, which operates through subsidiary ALSA, carried 9.5% more passengers over the period, helping to push up the revenue earned per kilometre travelled by 7.9%.

In North America the company’s revenues were up 20.6% in the same period as it got on top of rising wages for school bus drivers.

Fierce local competition caused wage bills to rise, but non-financial incentives helped the company retain staff.

Analysts at Jefferies said the company’s quarterly update showed a “solid” performance.

“We like National Express’s rail-free UK exposure and international and business diversification, which we see as supportive longer term,” they added.

The optimism was less pronounced in the UK where revenues only rose 3.1%, while the firm’s buses carried 3.9% more passengers.

“We had another good trading performance in our key summer period. ALSA performed particularly well and our UK coach business grew despite lapping a very strong comparative period last year,” said chief executive Dean Finch.

“We will continue to focus on operational excellence as the foundation of our strategy to drive growing shareholder returns and maintain profit growth in the coming years.”