PERTH, Scotland—Stagecoach Group has written down $107 million of the value of its North American properties—Megabus, Coach USA and Coach Canada—and is considering the sale of “all or parts” of them, documents show
In the company’s financial filing for the half-year ending Oct. 27, Stagecoach reported the North American businesses were profitable “but below our internal budget.” The results were blamed largely on competition and the shortage of drivers.
Stagecoach, based in Scotland, employs 4,000 people and operates 2,100 buses and coaches in North America. In addition to Megabus, it owns 25 U.S. carriers and Perfect Body Company, a repair facility in North Bergen, N.J. There are three Coach Canada facilities in Ontario and a Gray Line carrier in Montreal.
The North American operations achieved $21.2 million in operating profit on revenues of $323.3 million for the first half of Stagecoach’s 2019 fiscal year. Operating profits were $27.6 million in the first half of fiscal 2018. After the goodwill write-down, the North American companies recorded an $86.9-million loss.
Stagecoach reduced its long-term growth forecast for North American cash flows from 3.9 percent to 2.2 percent annually.
“Trading has been adversely affected by a number of factors, including increased competition in certain markets in which the Division operates,” stated the company. “Among the factors that can affect financial performance are changes in local economies, local competition, fuel prices, working patterns, shopping patterns, traffic conditions and cost pressures including the availability of sufficient suitable staff, and regulatory change.”
The financial statement continued: “We are reviewing strategic options for the North America Division, and while that includes ongoing discussions regarding a possible sale of all or part of the business, there is no certainty of a sale at this time. In the meantime, the divisional management’s focus is on growing the scheduled service (including megabus.com) and contract parts of the business.
“We have made some management changes to support our growth plans in these areas. We have invested in resources to build our contract business and we are hopeful that will boost future profits through new contract wins. Demand for megabus.com and other scheduled services should benefit from further, planned investment in technology to support growth in these businesses.”