Mobico Group (MCG) H2 2023 earnings summary

Executive summary

• Strong demand, passenger growth and contract wins lifted revenue, but inflation, reduced COVID funding and restructuring delayed profit and gearing recovery.

• Recovery varied by division: ALSA delivered record profits, North America improved operationally, UK performance was mixed and German Rail faced significant pressure.

• New divisional management had an immediate positive impact; restructuring and efficiency initiatives are intended to support FY24 and beyond.

Financial highlights

• FY23 revenue £3,150.9m, up 12% YoY; adjusted operating profit £168.6m, down 15% from £197.3m.

• Statutory operating loss was £21.4m versus £173.5m in FY22; total adjusting operating items were £190.0m, including a £260.6m ALSA goodwill impairment.

• EBITDA was £386.0m versus £418.1m; free cash flow was £163.7m versus £160.5m, with 91% free cash flow conversion.

• Free cash flow after growth capex and M&A was £86.2m versus £37.9m, reflecting lower growth capex and M&A.

Outlook and guidance

• FY24 adjusted EBIT guidance is £185m–£205m; volume, pricing, inflation, Germany and cost headwinds are partly offset by recovery actions and restructuring.

• FY24 Germany adjusted EBIT is expected to be a loss of c.£5m; Accelerate 1 targets £30m FY24 in-year savings, while Accelerate 2 targets c.£10m in FY24.

• Long-term FY27 targets include revenue of at least £3.8bn, adjusted operating profit of c.£300m, cumulative post-growth capex and M&A FCF of c.£300m, and gearing of 1.5x–2.0x.

• Q1 revenue was up 3.5% reported and 6.7% at constant currency, in line with current expectations.