February 23, 2017 / 10:32 AM / 10 months ago

National Express raises free cash flow outlook on international demand

LONDON, Feb 23 (Reuters) - Transport group National Express lifted its guidance for free cash flow on Thursday after lower fuel costs and strong international demand helped it to beat profit expectations, sending its shares higher.

Its shares rose to a 1-1/2 month high of 350 pence, up 2.4 percent at 1024 GMT.

The firm increased its free cash flow guidance to 120 million pounds ($149.54 million) from 100 million pounds, and said it would lift its dividend by 10 percent, as a result of its strong earnings and the disposal of its UK rail business.

In January, National Express agreed to sell a London rail contract to Italy’s Trenitalia to mark the departure of what used to be one of the biggest names in British rail.

Normalised operating profit from continuing operations rose 14.2 percent to 219 million pounds, while normalised earnings per share for all operations including UK rail rose to 27.3 pence. Analysts at UBS said the operating profit was ahead of expectations.

The company sees strong growth in North America and record passenger numbers in Spain and Morocco, while there was a resilient performance from its British bus business in challenging market conditions.

$1 = 0.8024 pounds Reporting by Alistair Smout; editing by Susan Thomas

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