Arriva profits rise despite fuel bill

The transport group Arriva yesterday reported a 6.4% increase in pre-tax profits to £109.8m; this increase came about despite an extra £20m fuel bill for the year.

The transport group Arriva yesterday reported a 6.4% increase in pre-tax profits to £109.8m; this increase came about despite an extra £20m fuel bill for the year.

Additionally, an increase in bidding costs for new franchise pitches and the loss of the Northern Trains franchise caused a 17% decline in rail profits which was, to an extent, offset by growth in Arriva's European businesses.

European operating profits increased by 15% as Arriva benefited from the impact of a full year's revenue from acquisitions made in both France and Italy.

While the news from Europe was positive for Arriva, many analysts expressed concern about the apparent reliance on the European operation's growth by acquisition strategy and reiterated the importance of Arriva securing a lucrative UK rail franchise.

Success in the recent East Coast Main Line bid, for which the company has been short listed, would help Arriva to strengthen its position in the UK market and, according to estimates, generate £550m in yearly revenues. Arriva's share price closed up 5p at 735p.

Northern Rock enjoyed a strong day on the market with its share price up 28p or 2.5% following the decision by the Bank of England to maintain interest rates at 5.25% for the time being.

The share price of the building and civil engineering group Tolent plc, for which we act as broker, had a strong week following the announcement of profits of £4.6m for 2006, a £727,000 increase on the previous year. The company's shares closed at 365p.

Elsewhere in the regional portfolio, Immunodiagnostic Systems (IDS), supported the overall market trend with its shares closing up 5.07% at 248.5p.

Fiona Erdozain an investment adviser at Wise Speke.

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