ARRIVA, the transport group that runs thousands of buses and trains across the UK and Europe, is steering a course to bumper annual profits after first-half earnings jumped 40 per cent.
A maiden injection of revenues from the vast CrossCountry rail franchise helped Arriva book profits of £66.3 million in the six months to June.
The Sunderland-based firm is one of the largest European transport businesses with operations spanning
10 countries and around 40,000 employees. In Scotland, it runs bus services in and around Glasgow while the CrossCountry route connects Aberdeen and Penzance.
Chief executive David Martin said higher fuel prices would have an impact on the company's costs, but they were also driving people from cars on to buses and trains.
"Fuel costs are a challenge for us and the industry as a whole, but they could cause more people to utilise public transport," he argued.
Arriva said its fuel costs this year were "substantially fixed", with two-thirds of the requirement for 2009 also secured in advance.
Operating profits at the UK rail arm, which also includes Arriva Trains Wales, jumped to £14.8m from £1.1m a year earlier.
The company's UK bus division increased operating profits by a fifth to £45.5m, based on a 14 per cent rise in revenues.
Panmure Gordon analyst Gert Zonneveld said: "Results were boosted by the contribution of the CrossCountry rail franchise, which started last year, and the absence of rail-bid costs."
Arriva is set to record full-year profits of about £155m, according to a consensus of City brokers.
The group spent almost £200m on acquisitions in the first half, and Martin hinted that further deals were in the pipeline.
"We are developing across mainland Europe," he added. "We continue to look at eastern Europe."
Martin singled out Poland, where the company has a small rail operation, as a growth market, and added that the group was looking to spend £50-100m on deals in the second half.
Operations in mainland Europe were boosted by the acquisitions of Madrid bus group Empresa de Blas y Cia and 80 per cent of Hungary-based bus business Interbus Invest.
Arriva said "encouraging" passenger growth reflected marketing initiatives and the wider take-up of concessionary travel. It added that more than 460 new vehicles will enter service on its regional bus network during this year.
The group is paying shareholders an interim dividend of 6.15p a share, up 10 per cent on a year ago.
The full article contains 426 words and appears in The Scotsman newspaper.
