ii view: Mobico shares plummet after latest results

First-half results to 30 June

• Revenues up 7% to £1.32 billion
• Adjusted operating profit down 12.7% to £59.9 million
• Adjusted pre-tax profit down 31% to £19.8 million
• Loss for the period of £255 million, up from a H1 2024 loss of £38 million
• No interim dividend payment
• Net debt up 4.5% to £1.29 billion

Guidance:

• Continues to expect full-year adjusted operating profit from continuing operations (excluding NA School Bus) of between £180 million to £195 million
• Expects a year-end covenant gearing ratio of around 2.5 times

Executive chairmen Phil White said:

"Mobico has delivered a solid performance in the first half of 2025, with revenue growth supported by continuing positive passenger demand, further contract win momentum and another record performance at ALSA. 

“We see significant opportunities to simplify and strengthen the Group and are taking decisive action to sharpen our operational and financial performance, including additional cost reduction plans and further leveraging ALSA's best practice across the business."

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ii round-up:

Transport operator and owner of National Express coaches Mobico Group (LSE:MCG) today detailed adjusted profit that missed City forecasts, hindered by both a competitive UK environment and operational issues at its North American transit and shuttle services. 

Revenue for the six months to late June rose 7% to £1.32 billion, although with adjusted operating profit down 12.7% to £59.9 million and below analyst forecasts of £64.4 million. A statutory loss of £255 million, driven by a write-down on its now sold North American school bus business, compares with a loss of £38 million a year ago. 

Shares in the FTSE 250 company plummeted by around a fifth in UK trading having come into these latest results down by close to 60% so far in 2025. The FTSE 250 index is up 5% year-to-date. Fellow transport operator FirstGroup (LSE:FGP) is up by a third so far this year. 

Mobico operates over 13,500 vehicles across brands including National Express in the UK, ALSA coaches in Spain, WeDriveU corporate and paratransit services in North America, as well some rail services in Germany. 

Cost reductions and the integration of UK coach operations with ALSA to create a pan-European coach business continue to underpin management’s estimate for full-year adjusted operating profit of between £180 million and £195 million, excluding the sold school bus business. That’s potentially up from £187.7 million in 2024. 

Sale proceeds from the sold North business are expected to leave the group’s leverage or profits to debt ratio at around 2.5 times, down from 3 times currently. Group net debt as of late June of £1.29 billion rose from £1.24 billion a year ago. 

A third-quarter trading update is likely early to mid-November.

ii view:

Joining the UK stock market in 1992, the former National Express Group today employs over 30,000 people. Operating around 25 billion passenger kilometres every year, group services include both long-haul and private hire coaches, urban, corporate shuttles, and rail services. The ALSA European business generated most sales during this period at 52%, followed by the UK at 22%, WeDriveU at 16% and German rail the balance of 10%. 

For investors, group net debt of £1.29 billion compares to a stock market value of under £170 million. The UK market remains highly competitive. The sale of the North American school bus business reduces diversity. Volatile fuel costs and industry-wide staff relations should not be overlooked, while more flexible working from home options in the wake of the pandemic also warrant consideration. 

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More favourably, a focus on reducing debt is ongoing with the group’s leverage ratio expected to improve come the year end. A new management team is evaluating each of its business divisions. A total of 36 new contracts were won in 2024, representing total revenue of £766 million. Diversity of both transport type and geographical location exists, while a move to zero emissions vehicles across its fleets is ongoing.

For now, there are clear environmental benefits of shared transport which offer grounds for longer-term optimism. However, while some investors might be comfortable betting that the share price slump is overdone, more cautious investors are likely to await firmer signs of profit recovery and further debt reduction before taking an interest.

Positives: 

• Positive environmental benefits
• Focus on costs

Negatives:

• High net debt
• Competitive UK market

The average rating of stock market analysts:

Strong hold