rofits in the UK bus industry rose in 2013/14, bringing to an end a run of three consecutive years of falls, according to new analysis published this week by Preston-based transport specialists The TAS Partnership. The 128-page report Bus Industry Performance 2015 presents the results of its annual analysis of 120 local bus companies around the UK, in what is the 24th year of the firm’sBus Industry Monitor project.
However, revenue grew by less than inflation, the authors say, pointing to growth of 1.2% at a time when inflation was still running at around 2.5%. Operating costs rose by just 0.6%. helped by falling fuel prices.
Turnover across the companies analysed rose to £5,500m, whilst operating costs reached £5,131m.Operating profit was £369m, up by 9.6% from last year’s £337m. Operating margins recovered to 6.7%, up from 6.2% in the previous year, and back to the levels recorded in 2011/12.
Companies outside London saw a larger 2.3% increase in turnover, taking the total to £3,745m, whilst operating costs rose by 1.9% to £3,460m. Operating profit was 8.2% higher at £285m, and operating margins improved to 7.6%, from 7.2% in 2012/13. However, they remained short of the previous year’s 8.8%.
At the same time, the report provides an updated estimate of the levels of profits which operators need in order to meet their financial obligations and invest for the future. The model suggests that the required margins are between 9.9% and 10.3% – well above the levels currently being earned.
Commenting on the report, editor Chris Cheek said, “At a time of uncertainty prompted by savage cuts in spending on tendered services and the new Buses Bill, there is some good news from this report, in that profit levels seem to have stopped falling. However, with revenue continuing to fall in real terms, and signs that real-term labour costs are beginning to rise once more, the financial outlook for the industry remains extremely challenging.”