Stagecoach upbeat on future despite fuel costs

By John Bowker

LONDON (Reuters) - Scottish bus and rail firm Stagecoach (SGC.L) said it could thrive in the slowing economy with higher fuel costs forcing commuters to take public transport as it announced an 8 percent rise in full-year pretax profit to 174.4 million pounds.

The company said on Wednesday trading since the year-end in April had been in line with its expectations, and it had seen no impact yet from the slowing economy on its London commuter rail routes, despite a weakening job market.

It echoed rivals such as Go-Ahead (GOG.L) by saying while its own fuel bill could rise 25 percent this year to 140 million pounds, it was benefiting from a growing number of travellers abandoning their cars in favour of public transport.

However, this did not mean ticket prices would necessarily stay at current levels, it said.

"The figures are telling us that central London employment is down, but we are not experiencing any decline," Chief Executive and co-founder Brian Souter told reporters.

"Why are we experiencing this? The answer is a shift due to high fuel costs and concern over climate change. We have a very, very positive outlook," he said.

However, Finance Director Martin Griffiths indicated there could be a hike in ticket prices as the company looks to claw back the soaring cost of fuel, which at current prices will add 25-27 million pounds to the cost base in 2008/09.

"Clearly we will look to recover costs, and pricing is an option. But we can attract more people out of their cars and while the figure is not insignificant, fuel is still only 12 percent of our operating costs," he said.