Bus Industry Monitor 2005 Published
Bus industry profits fall again as labour cost inflation bites
Pre-tax profit margins at Britain’s bus companies have fallen for the fifth time in six years, according to a new report published by consultants TAS. Labour costs were the most significant factor in the rise in operating costs, with an increase of almost 8% in the cost of each employee – around four times the rate of inflation.
Bus Industry Monitor 2005, published on 25 November, analyses the results of more than 130 local bus operators around the country. The 600+ page report shows that operating profit margins in 2003/04 for over 130 bus companies around the country fell to 9.9%, compared with 10.3% in 2002/03. Revenue grew by 9.1%.
Outside London, companies recorded a reduction in operating margins to 10.2% (2002/03: 10.9%). Revenue growth was around 4.5%, above the level of inflation, but insufficient to meet a 5.3% increase in operating costs.
Labour Costs
Labour costs per employee rose by an average of 7.9%, with the largest increase (9.7%) being recorded by operators in London. Labour costs per employee rose by 7% in the English PTE areas and Wales, by 6.1% in Scotland and 5.2% in the English shires.
Capital Investment
The companies surveyed invested a total of GBP305m in fixed assets in 2002/03, sharply up from the previous year’s GBP210m. However, analysis suggests that a further GBP81m worth of new vehicles were taken on operating leases.
The market for new buses and coaches in the UK fell in 2004, with 4,156 units sold, some 6.1% lower than in 2003. Some 28% of these were double deckers, predominantly for the London market.
New estimates of future investment requirements show expenditure of GBP565m to update current fleets, with a further GBP629m by 2009 and a further GBP1,629m in the following five years to update fleets and maintain replacement programmes.
Company League Tables
Judged by operating profit margin:
- Yorkshire Coastliner, was the most profitable bus company in Britain in 2003/04 for the third year in a row. This subsidiary of Blazefield Holdings earned a margin of 27.4%.
- Second came National Express Group subsidiary West Midlands Travel on 20.8%
- Third was Wellglade subsidiary Barton Buses on 19.4%
- Fourth was a second National Express Group subsidiary, Tayside Public Transport (which trades as Travel Dundee) on 18.5%
- Fifth was FirstGroup subsidiary First South Yorkshire which earned 17.9%
By the same measure, the worst performing companies were:
- NEG’s Travel London company (formerly Connex Bus) with a 27.9% loss margin
- Arriva Colchester (15.9%).
- Transdev’s second London operation London Sovereign (13.9%)
- Municipal Islwyn Transport (5.7%).
Fourteen companies made an operating loss, three ahead of last year.
Public Spending
Budgeted public expenditure on bus services rose by 3% per cent in 2004/05 to GBP1,855m, up from GBP1,801 in 2003/04. As a result, spending is now 53.7% up in real terms compared with the position five years earlier.
Of this, GBP1,602m was for England, GBP180.5m for Scotland and GBP72.3m for Wales. Budgeted expenditure on supported services in England grew by 17.9% and in Scotland by 1% but fell in Wales.
Cumbria maintained its tradition of having the lowest per capita expenditure on public transport in the country, at just GBP1.28. This compared GBP114.35 in Merseyside.
ENDS
NOTES TO EDITORS
1. TAS Publications & Events is the publishing arm of The TAS Partnership. Founded in 1989, TAS has since grown to become the UK’s leading specialist public transport consultancy, with a turnover in excess of GBP1.5m per annum. Its recent clients include the Department for Transport, the Scottish Executive and the National Assembly for Wales – plus local authorities and transport operators throughout the country.
2. Bus Industry Monitor was first launched in 1991 and this fifteenth edition offers four reports on different aspects of the industry available separately or as a complete package:
- The Market for Bus Services
- Public Sector Spending and Support
- Capital Investment & Fleet Analysis
- Industry Performance, including detailed company reports on over 130 local bus operators and their parent groups