Stagecoach boosted by success of UK rail division

The bus and rail operator Stagecoach yesterday pointed to strong passenger and revenue growth at South West Trains for a stellar performance from its rail division in the first half of the year.

Stagecoach said it had seen "strong" trading in the year to date, with its UK rail division performing ahead of expectations. Shares in the company closed up 1.25p at 83.75p.

South West Trains traded particularly well, benefiting from both passenger and revenue growth - estimated to be up 3 per cent and 5 per cent respectively. As a result, it said, operating profits from its rail division for the year to 30 April was expected to be ahead of expectations.

It also said it expected its Virgin Rail Group joint venture with Sir Richard Branson's Virgin Group to produce a break-even position for the year as a whole. Meanwhile the company's bus operations in the UK, New Zealand and North America had continued to trade "in line" with expectations, it said.

Stagecoach, which has been restructuring its US business, said it had now "largely completed" its North American disposal programme, which generated over $300m (£179m) of proceeds. City analysts were yesterday looking at upgrading their profit forecasts for the business.