Go-Ahead shares fall 25% on weaker profits

Go-Ahead Group plc (LON:GOG) shares plunged on Thursday after it saw its profits fall for the half year.

Shares in the travel operating company were down by over 25% during trading on Thursday.

Go-Ahead said that, for the six months ended 28 December 2019, group operating profit amounted to £60 million, down from £64.5 million recorded for the same period a year prior.

Meanwhile, bus operating profit was down by 3.4% to £45.3 million, and rail operating profit decreased from £17.6 million one year ago to £14.7 million.

The company has lowered its overall expectations for the full year following the lower profitability in its regional bus business in the first half and the impact of adverse weather in recent weeks.

“Our London & International bus business is performing well and in line with expectations for the full year, while our expectations for our regional bus business have slightly reduced, reflecting cost pressures and adverse weather on passenger travel,” David Brown, Group Chief Executive, commented on the results.

“In rail, while we await the outcome of the Williams review, our current UK operations are performing well and we are in the final stages of discussions with the Department for Transport regarding a potential direct award contract for Southeastern. The stronger than expected UK rail performance has offset the impact of operational challenges in the first six months of running our German rail contracts. We began running rail services in Norway in December and are delivering high levels of operational performance,” the Group Chief Executive continued.

“In the second half of the year our focus will be on continued management of our regional bus cost base, integrating new contracts and recent acquisitions, and improving our German rail operations.”

Commenting on the potential business impacts caused by the coronavirus outbreak, the Group Chief Executive said: “While it is unclear how the coronavirus situation will evolve in the coming weeks, travel patterns are likely to be impacted in the second half of the year.”

Go-Ahead Group plc (LON:GOG) shares were down on Thursday, trading at -25.09% as of 11:58 GMT.