- 2023 profit guidance revised down
- Second delay to 2023 results
- Expects reduction in cost recovery of around £15 million
Formerly known as National Express, Mobico (MCG) was the second biggest faller in the FTSE 250 after the international transport operator lowered annual profit guidance amid accounting issues at its German business.
The shares fell 8% to 65.4p which, if sustained would be the worst showing for almost six months. Year to date, shares in the bus and rail group have lost around a fifth of their value compared to a 0.5% gain in the mid cap index.
FURTHER DELAY TO 2023 ACCOUNTS
On 20 February, the bus and rail business said it needed to delay the publication of its 2023 results to allow its auditors to undertake a review on certain accounting judgements related to its German rail operation.
Today the company said that while good progress has been made, further judgemental items remain to be agreed between the parties.
On top of that, a spanner has been thrown into the works after unexpected changes to certain statistical indices published by the German Federal Statistical Office. Previous versions had been used by the group in calculating the performance of the German rail business.
The group therefore needs more time to undertake the work required to assess the impact and today announced a further delay to the publication of its full year results.
At the current juncture the company estimates the maximum effect of the revised indices, before any mitigation, will be a reduction in total cost recovery of around £15 million over the term of the contracts to 2032.
PROFIT GUIDANCE LOWERED
The upshot of these issues is management has decided to reset full year profit expectations.
The group now expects full year EBIT (earnings before interest) to be at the upper end of the £160 million to £175 million range compared with a prior range of £175 million to £185 million.
Mobico expects an increase to the onerous contract provision of about £70 million as of 31 December 2023 on top of a prior year adjustment in relation to the onerous contract provision in 2022 of around £25 million.
In October 2023, the company issued a profit warning and suspended dividends and said it was planning to sell its North Americal school bus business to reduce debts.
