UK transport company Mobico Group PLC 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, formerly National Express, expects upfront net proceeds of up to £385m which will be used to cut debt and fund growth opportunities, particularly in the ALSA division, and an earn-out of up to $70m depending on future performance.
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.
The deal comes 18 months after Mobico started preparing to offload the business to cut its debt burden on more than £1bn.
Reporting by Frank Prenesti for Sharecast.com