Arriva posts reduced profits, is affected by loss of Northern franchise

Arriva posts reduced profits, is affected by loss of Northern franchise

	Published : Fri, 03 Mar 2006 08:50 By : Phil Bateman Print this Story

LONDON: Britain's train and bus operator Arriva Plc. posted a profit of 107.9 million pounds for 2005, down 1.3 per cent from 2004, as it lost its Northern rail franchise more than halved profits. This affected increased profits from its bus services and its operations in Europe. The company maintained it is planning to expand in Europe and increase fares to meet higher costs of fuel, which will ensure a better 2006.

The company's revenues dropped to 1.63 billion pounds from 1.76 billion pounds in 2004.

Analysts had forecast a profit of around 109 million pounds.

The company's earnings from bus business in the U.K. increased 7 per cent to 68 million pounds, despite a 6 million-pound increase in fuel costs. Its rail division had 14.9 million pounds in profit, compared to last year's 31.9 million pounds.

Its European operations earned 48 million pounds in profit, an increase of 37 per cent.

Arriva is one among the five companies, which have been qualified to bid for the franchise to run trains in the southwest England. The department of transport is expected to decide on the operator in the autumn of 2006. The company is also planning to bid for new franchises.

The terrorist bombings in London in July 2004 had affected the company's Original Tour operations. It said the number of customers had come down by 40 per cent during the peak summer season, which itself caused a shortfall of 2 million pounds in revenue. Original Tour is the biggest operator of its type with 70 vehicles charging 18 pounds per person per ride.

In addition to running open-topped tour buses, the company is the largest operator of local buses in London with a 19 per cent share of the city's network, including many of London's new articulated "bendy" buses.

The company had recently sold its van rental business in Europe and is completely focusing on its bus operations in Denmark, the Netherlands and Italy.

The company is expecting to gain from the World Cup and is gearing for the event. Chief executive Bob Davies said the World Cup is an opportunity to raise the company's profile in Germany. "When people see our logo on the side of buses, it will reinforce that we are one of Europe's biggest transport operators."

Arriva has proposed a final dividend of 14.77 pence per share, up 5 per cent from a year ago. Its shares went up 2 per cent to 620 pence, valuing the company at around 1.2 billion pounds.