(Reuters) - Stagecoach Group (LON:SGC) Plc reported higher annual profit on Wednesday, even as the bus and rail operator faces losing three important rail franchises that could wipe off 1 billion pounds from the company's books going forward.
The company, which sued the British transport authority last month for disqualifying it from contracts, said pretax profit from continuing operations rose to 132.9 million pounds for the year ended April 27 from 128.3 million pounds a year earlier.
"We continue to focus on driving growth at our core high quality bus and coach operations in the UK, but we have no intention to bid for new UK rail franchises on the current risk profile offered by the Department for Transport," Chief Executive Officer Martin Griffiths said in a statement.
Stagecoach's bids to renew existing East Midlands and West Coast rail franchises with partners were disqualified over pension responsibility concerns, leading Stagecoach to sue the British transport authority along with partners SNCF and Virgin.
Without the three franchises, Stagecoach could lose its UK rail business, which rakes in almost half of its revenue. Operating profit for 2019-2020 from the business is expected to be minimal.
Annual revenue from continuing operations fell 33.3% to 1.88 billion pounds mainly due to two franchises ending.
Revenue from Stagecoach's UK bus business was higher even though over recent years Britons have relied less on buses as they shop more online and change their working patterns.