Mobico sees FY at lower end; Sells Nth America school bus unit for $608m

(Sharecast News) - UK transport company Mobico on Friday said annual earnings would be at the lower end of guidance after announcing it had sold its North America school bus business to I Squared Capital for up to $608m (£457m) amid wage inflation and potential extra costs from US tariffs. Mobico expects upfront net proceeds of up to £385m which will be used to cut debt and fund growth opportunities, particularly in the ALSA division.

Guidance for 2024 adjusted operating earnings is pencilled in at £185m - £205m. Mobico said it expected to deliver a "significant" statutory loss due to goodwill write-offs, derecognition of deferred tax assets and further onerous contract provisions relating to its German business.

"Whilst school bus has demonstrated its recovery from the (Covid) pandemic's effects, it continues to require significant maintenance and growth capital investment and has experienced persistent market challenges such as driver wage inflation and, more recently, potential fleet cost inflation from new tariffs," the company said in a statement.

Reporting by Frank Prenesti for Sharecast.com