Transport group Arriva has unveiled improved profits from its UK bus operation, despite a #3 million hike in its half-year fuel bill.
The Sunderland-based group - which runs buses into Birmingham from Tamworth, Burton-upon-Trent, Lichfield, Sutton Coldfield and Kingstanding - said cost controls and improved revenues, including from some fare rises, helped the division to operating profits of #30 million in the six months to June 30, an increase of #1 million on last year.
Chief executive Bob Davies said the division's fuel bill would be #14 million higher in 2006.
He also said its main bus operations were not affected by July 7 bombings in London, although its open-top tourist bus business did not perform well.
The resilient performance in the UK was accompanied by continued strong growth in mainland Europe, where operating profits rose 44 per cent.
"Mainland Europe remains the key strategic differentiator and future growth driver with good progress demonstrated and new opportunities continuing to emerge in Sweden, Germany and Holland," Citigroup told clients in a note.
Overall group profits were slightly lower this year, down to #57.6 million from #58.8 million in 2004, as Arriva?s Northern rail franchise came to an end in December.
The result compared with a consensus market forecast of #58.4 million, according to figures provided by the company.
With trains or buses in Denmark, Germany, Italy, Sweden, the Netherlands, Portugal and Spain, Arriva achieves 36 per cent of its operating profits from mainland Europe - its fastest growing division.
The group said the medium term outlook for the regional UK bus market remained favourable, although rising fuel costs were providing a Oconsiderable challengeO in the short-term.
The company said it had fixed the fuel price for the UK bus division for 2006, resulting in additional costs of around #14 million.
Increased fuel costs also affected the business in mainland Europe, although the impact was mitigated by additional revenues derived from cost indexation on tendered contracts and state approved fare increases.
Operations in mainland Europe showed a rise in profits to #21.5 million, from #14.9 million, as the full-year impact of acquisitions helped revenues to rise to #308.3 million from #238.6 million.
Arriva Trains, which now consists of the Wales franchise which runs services into Birmingham New Street, posted profits of #8.4 million, down from #14.6 million last year because of the loss of the Northern service.
It said it continued to see underlying growth in passenger numbers, particularly in South Wales.
The company said it increased its half-year dividend payment to shareholders by five per cent to 5.07p a share.