British transport group National Express is bullish on margin growth after reporting a 26 percent rise in first-half underlying profit, at the top end of forecasts, according to Reuters. "There is more to come in terms of margin growth...we should see the margins continue to grow in the second half," Chief Executive Dean Finch told reporters. "The summer is important to us, but it started well particularly in Spain... so we just see the trend continuing," he added. National Express, an operator of coach, bus and rail services, said underlying profit for the six months to end June rose to 95.5 million pounds ($156 million), at the top end of forecasts. Analysts pointed to improvements in the group's UK bus and rail businesses, with earnings before interest and tax (EBIT) up 39 percent and 24 percent respectively. "National Express has replaced the recovery theme with an underlying growth story, although it still needs to repair the potential loss of rail franchises in 2012 and has headwinds in its bus and coach businesses for 2012," said Paul Hickman at Peel Hunt, upping its target price and full-year numbers. National Rail's operating margin improved by 150 basis points to 10.5 percent, recovering from historic lows in 2009. It said last month that first half revenues grew across its bus and rail businesses at home and abroad. The company, which operates in the UK, Spain and North America, said it was eyeing bolt-on acquisitions, particularly in Spain and North America, where it is the second largest private operator of school bus services. Shares in National Express were up 2.76 percent at 08:14GMT. The higher cost of fuel and motoring, particularly rising car park fees in city centres, are pushing people out of their cars and onto public transport said Finch. "The cost of fuel is an issue for private households," he said, though noted the importance of customer experience so new passengers don't return to their cars during better economic times. "A combination of the higher cost of motoring and the high cost of fuel and the issue of car parking in many city centres...that's all helpful to us," he said, describing it nonetheless as an "ongoing trend". National Express, which earlier this year reached a truce with rebel investor Elliott Advisors after it called for a boardroom shake-up, said it is now focusing on lowering its debt and investing in future growth, after it reported an interim dividend at 3 pence per share.
