Gloomy analysis of bus operators’ profitability

Profits earned by bus operators in the regions outside London are falling as income falls, prompting job cuts and reduced investment levels, according to the latest analysis of the industry’s financial performance.

In what the authors describe as their “gloomiest report” in the past 28 years, the  latest report, Bus Industry Performance 2018 produced by Passenger Transport Monitor says that bus operators profits are being hit by falling revenues and rising costs.

The report assesses the published accounts of 108 bus companies for the 2016/17 financial year and reports that companies outside London saw a 1.0 per cent fall in turnover, while operating costs rose by 0.9 per cent, and operating profit almost 21 per cent lower. Operating margins were to 6.9 per cent compared to the previous year’s 8.6 per cent.

The authors have updated their assessment of operating profit levels needed to allow bus companies to cover their cost of capital and future investment requirements to between 7.9% and 9.2%, adding that less than a third of bus companies are now achieving the level required.

“In many ways, this is the gloomiest report we have published since we started to monitor these things 28 years ago,” says report author Chris Cheek. “All the indicators are negative – revenue, profit, passenger numbers, staff productivity, investment. No wonder companies like FirstGroup and Deutsche Bahn (Arriva’s parent) are considering their future in the business.”

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