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Hello, and welcome to the National Express trading update. [Operator Instructions] And just to remind you, this call is being recorded. Today, I'm pleased to present Dean Finch, CEO; and Chris Davies, Finance Director. Please go ahead.
Thank you, and good morning, everybody. So I'll just say a few words about the same thing we've put out this morning, and then I'll open it up, as usual, to Q&A.So we've had a very strong start to the year across the business. You can see from the note that North America is up 9%, and ALSA's up 6.3%. U.K.'s up -- UK Bus is up 0.7%. UK Coach is up 2.3%. German rail is down. But when you exclude the one-off effect of the benefit we got in last year's results from the NRW tariff agreement, that's actually up 4% on a like-for-like basis. So overall, the group's up 6% in the first 4 months of the year on a constant-currency basis and 1.7% on a reported basis.We've had really good profit performance in the period. So on a constant-currency basis, profit's up 25%. On a reported basis, profit's still up 16%. But before we all get carried away with that, that's really just a timing thing. And of course, the results we had this time last year were impacted by the writeoff of BTG, which is slightly flattering the like-for-like comparison. But when you take out that like-for-like -- when you take out that adjustment, the like-for-like is still very strong, and we're delighted with this start for the year.It wouldn't be me if I didn't say at this time of the year that I don't get too carried away with guidance, please. At this stage, we can do that once we've seen how we're trading at the end of August. Summer is obviously a very key period for us. But nevertheless, a very strong result.Turning to the individual businesses. Turning to North America. Well, along with everybody else, we've got clobbered by snow days. We had more snow days this year than we've ever known before. So the hit from snow days this year was about $7 million. We expect to recover some of that, but you never recover all of that. So if you take -- including that, School Bus is flat if you exclude acquisition. So I'm quite pleased with that as a School Bus performance. That was a severe impact of snow from the year. So like-for-like, that's a really good School Bus performance. Transit was up organically, and the rest of it is acquisitions coming through the business. I have to say, I'm quite pleased with how the bid season has gone this year. We've been pretty robust in terms of pricing, so there's been puts and takes in that. But overall, what that means is that when we roll forward to next year, we think now we will see price inflation exceed wage inflation. So that should mean an improvement to overall profits and improvement to margin and, of course, an improvement on return on capital employed. So I'm cautiously pleased with that. We have to, obviously, execute the rest of the season well. And as you know, we're pretty focused on execution.Turning to Spain. We've got 6% growth in constant currency. That's broadly a half-and-half split between acquisitions and organic. I'm very pleased with the performances of all of the businesses, urban, long-haul and regional. And Morocco is also performing really well, and our Swiss business has performed brilliantly in the first part of the year. So delighted with that acquisition. More to go there -- I think more to go. And to point out, we made a small acquisition in the period, but that's not what's impacted the results so far.Before I turn to U.K., the U.K., what I would say or I would note is that we probably have more opportunities in terms of either organic bids and acquisitions than I've seen in years. Now that doesn't mean any or all of them will translate into wins for us. Clearly, that's a pretty good position for us to be in. And if I just mention a few, for example, the Rabat, best opportunity in Morocco. There are other cities in Morocco that are opening up. There are other opportunities opening up in Morocco, too. Some excellent opportunities in Spain opening up as well as in North America. So I feel we're in a pretty good position, and we just need to see that through.The Spanish concession renewal process has started, but it's promptly stopped. So we'll have to see where that goes. There's been an appeal against the first renewal process. We think though that, that will sort itself up pretty quickly. So I will tell you more about that at the half year. But I think as we said at the year-end, we're still comfortable with how the ITT is scoring these competitions, and we feel that also is in a very robust place to perform well through the cycle.So turning to the U.K. Coach had a brilliant Easter, notwithstanding the weather, and continues to perform pretty well. UK Bus, it's pleasing to see that business continue to move forward this year. Although the headline revenue growth is still pretty subdued, it is nevertheless possible at those rates for us with managing the overall portfolio of the bus business to achieve profit growth. So I'm pleased with that. And yes, I think probably, overall, that's it. Germany is on track. It's mobilizing to me. Franchise is setting up next year. So yes, thank you for listening to me. I'll open it up now to any questions you might have.
[Operator Instructions] Our first question is of the line of Damian Brewer at RBC.
A few questions for me. First of all, on the group as a whole, could you update us where you are in your fuel hedge position, just given these movements in the spot price? Any update and elaboration there would be helpful. Secondly, on UK Bus, could you give us a feel of what the price-volume mix was on the commercial revenue growth running a little ahead of the average of 0.8%, and in particular, what role your business will play in the BRT plans announced for the region? And then finally, in North America, it looks like pricing is good. Could you give us a feel for what the retention rates have been running at on contract renewals, and whether the change in ownership structure of Student Transportation is expected to have any effect on the market?
Damian, so I'll answer these questions in reverse order in order to give Chris a chance to still see where we are on hedging. Yes, I think -- look, I think the STA acquisition, depends on which direction you're really asking, but the question I'll answer is, I think the age is good for the business in terms of the discipline in pricing. Our volume has gone back a bit this year. So our retention rate will be lower, but that's okay with us. We deliberately set out this year to push up pricing. And inevitably, that's a little bit extra loss of volume. So we're probably running -- about this point in the year, we're probably running about 300 to 400 buses behind where we have been at this point in the year on a like-for-like basis. But they were either loss-making contracts or very low margin contracts, which simply couldn't justify the required return on capital for the amount of investments. So we're not losing business. But equally, we're not a charity, and we can't run these things at any price. And so I'm pleased where the bid season has ended up overall because, as I said in my rambling preamble, I feel that puts us in a good place to take profit margins and transform next year in School Bus. The -- turning to UK Bus, the price-volume mix is skewed towards volume. So I don't have those numbers to hand -- but I think pretty much all of the growth is around volume. And we actually -- again, I'm taking prices backwards a shave and, thus, use a clearly stimulating growth. Obviously, that's an average picture. So parts of the portfolio, we've seen some prices going up. In other parts, we've seen pricing going down. But it is encouraging to see an acceleration in commercial growth in the sector. We are still, like everybody else, dealing with the overhang from the increasing age of concessions, and still -- so we've still got to work very hard to effectively stand still for another couple of years until we're out of that cycle, which I know you understand. But it is encouraging to see volume growth. So that's pleasing. I think the BRT plans that you alluded to are exciting opportunity, both for us and for the city of Birmingham. And I think we're in a unique position to help deliver huge plans well ahead of time. And so we're working very closely with the authorities on that. Chris?
Yes. So Damian, precisely as we guided before, so GBP 20 million of tailwind to this year. And that's all locked. So there's no variation for any spot prices for that. We are significantly hedged now through to '19, and then with about 1/4 to 1/3 of '20 hedged all at about the same level. So if the stock price continues to go up, we will see some of that come through in '19 and '20, but nothing in '18. And the forward prices aren't yet moving with where spot's moving, but watch the space. So GBP 20 million, which is about $10 million in the U.S., EUR 10 million in Ulster. The balance in the U.K. for this year is locked, and 75% of that locked for next year, which will give us about the same rate as '18.
Before we go on to the next question which is Joe Thomas at HSBC, [Operator Instructions]. Joe, over to you.
A couple of questions, please. Actually, 3. One is you talked a lot in the past about the charter business in the U.S. Is there anything that we can see in the numbers that you reported today about an influence of that going through, which consciously we're quite optimistic about that. And these are good numbers. Second thing, on a constant detail, can you just talk about how much you've spent this year on acquisitions? And therefore, how much further there is to go? And then, finally, the -- you mentioned that even though UK Bus revenues not particularly -- are not growing particularly strongly, you could grow profits by managing the portfolio. I was just hoping you could give a bit more color on what you meant by managing the portfolio there.
Okay. Yes, of course, Joe. You're quite right on charter. I suppose I've been a bit of a plunker for not mentioning it. So thank you for mentioning it. We have done very well on the charter performance. It's roughly, at the moment, running about $1 million ahead a month compared to where we were last year. And we think that is going to significantly accelerate over the key period, over the summer. And you're quite right, it has been a material contribution to the performance of the North American business so far this year. And there's a lot more to go at that as we improve ourselves, improve what we're doing in-house on that. So sorry about that, and thank you for pointing it out. In terms of acquisition spend, we haven't done that much so far this year. So much of it's still ahead of us. We spent about, I think, GBP 24 million year-to-date on a couple of small acquisitions. But I'll leave it to -- there are some really exciting opportunities for us out there. None of them are going to be huge in terms of spend. But still, nevertheless, they'll be great for us if we land them and very strategic for us as well. And then third, finally on bus. What I meant really is managing the mileage. What we're doing is redeploying mileage from -- we're not really cutting mileage, but what we are doing is redeploying the mileage we run, so that we're running more mileage in high-growth areas and less mileage in low-growth areas basically. And it's quite demonstrably having a good result on the business.
[Operator Instructions] And we go to Joe Spooner at Jefferies.
Just a quick one on UK Coach, if I may. The performance that you're reporting over Easter obviously took quite a step-up there, and just wondering if there was any change in the trading stance to have promoted that at all.
No, it was -- I'm not quite sure I understand the question, but maybe I'm being a bit dim. But no, it's volume. We managed the revenue mix and pricing mix intensively, as you might imagine. And that does vary from year-to-year depending on how we feel the market is performing. This year, it was a real combination in the detail between some areas where we firmly promoted volume through price, and other areas where we firmly promoted yield at the expense of volume. And then we ended up getting both. I think my best location, and when I was happiest with, which I won't disclose, obviously, we followed up the pairs by 9%, and we got 19% extra volumes. And that was quite a happy experience overall. But no, I mean, obviously, we are helped significantly by railways doing their best to destroys themselves. And that -- I don't mean by that through curious over key trading periods, where every other Briton wants to travel. So obviously, we'll benefit from that, how long may that continue. But no, we've seen a good, good performance there. We haven't really, in these results yet lapped the significant impact -- negative impact we saw from terrorism last year. And so that will begin to come through trading results in May and June. So we're watching that space with interest. And obviously, we'll report on that one when we know it.
We now go to the line of Dominic Edridge at UBS.
Just a very quick one on just going back to the North America and obviously the wage pressures there. Can you just maybe talk a little bit about what sort of actions you're putting in place to try and sort of alleviate some of the pressures, and whether you're seeing the churn rates and the drivers picking up in terms of people leaving, you having to recruit people to come back in, and what that means generally for the sector. I mean, do you see it getting worse again next year? Or how do you see the momentum there?
The momentum is abating a bit at the moment. I'm not saying it's easy, but the momentum in wage inflation is abating. So we put a lot -- we took a lot of strong action last year to put up wages. And by and large, that's holding, and we are seeing employment levels where they -- we are seeing our establishment levels where they need to be in order to run the service. Obviously, there will be pockets across the country, but I was sure and others where we're over. But at the moment, we are managing. Clearly, as we go into the T, some of the areas, in terms of recruitment, we're already out there with jobs. There's -- we're doing what we can to retain staff that leave us over the course of the summer and come back. We're opening up a number of more recruitment centers this year than we did in previous years. So lots and lots of small details, which will add together to ensure we have a good startup. So at this stage, I emphasize, it is only at this stage. I can't tell you where we're going to end up until we see that when we come back to school in August and September. But at this stage, I'm feeling relatively optimistic that we're seeing, for the first time now in a couple of years, settlements with the customer outpacing settlements -- or outpacing wage inflation. So that should be good for the margin. Overall, I think there has been good discipline across the industry this season. And it is as intense as ever going into the season. But overall, there's been good discipline.
At this stage, there are no further questions in the queue, so can I please pass it back to you for any closing comments at this stage?
I thought the silence meant it was supposed to play out into song and -- anyway, forgive me. Thank you very much all for joining us this morning, and we look forward to talking to you again at the half year. Thank you.
This now concludes today's call. Thank you all very much for attending. You may now disconnect your lines.