Stagecoach climbs after US arm is put up for sale

ShareS in Stagecoach have motored higher after the transport firm revealed its struggling US arm is on the block.

Stagecoach, which has been testing self-driving buses between edinburgh and Fife, is in discussions to sell all or part of the US division, including the american branch of bus operator Megabus.

Investors welcomed the change in strategy, despite Stagecoach’s £22.6m loss in the six months to October compared to a £96.7m profit a year earlier.

a chunk of that came from the US bus business, as Stagecoach wrote down its value by £85.4m.

russ Mould, investment director at aJ Bell, said: ‘Competition has been fierce and staff and fuel costs have been going up, leaving Stagecoach in a difficult situation. Some of the issues include a national shortage of drivers in the bus and trucking sector.’

But in the UK, operations were running more smoothly – even after the Government took back the east Coast mainline rail contract from Stagecoach and Virgin Trains this year.

Stagecoach owns 49pc of Virgin rail Group, which is producing strong profits, and Stagecoach’s own rail division is shortlisted for three new franchises. Like-for-like revenue per mile has risen in its UK regional bus arm.

entire revenue fell from £1.8bn to £1.2bn, after it lost the east Coast and South West Trains contracts, but profit increased across all divisions. Shares climbed 15.1pc, or 23.2p, to 177p.

housebuilders and banks also boosted the market as investors hoped greater parliamentary control over the Brexit process would lead to a softer withdrawal from the eU. Theresa May suffered a defeat in the house of Commons on Tuesday, which means MPs can prevent a no-deal Brexit.

Many traders think a less dramatic withdrawal from the eU will be better for the UK economy – and therefore better for the companies that depend on it, such as British housebuilders and banks.

On the FTSe 100, Persimmon shot up 7.1pc, or 131.5p, to 1995.5p,

Berkeley Group by 6pc, or 193p, to 3423p, Barratt Developments by 5.1pc, or 23p, to 473.8p, and

Taylor Wimpey by 4.2pc, or 5.6p, to 137p. among mid-sized housebuilders,

Redrow leapt by 6.1pc, or 28.4p, to 496.2p and Bellway by 5.7pc, or 143p, to 2645p. even with the sharp rises, the

FTSE 100 still dipped by 1.4pc, or 100.92 points, to 6921.84.

Construction equipment hire company Ashtead was the biggest loser, dropping 5pc, or 103.5p, to 1672.5p, amid fears of a slowdown in the US economy.

Laith Khalaf at hargreaves Lansdown said: ‘We wouldn’t bet the house on gains being sustained. There’s still a wide range of outcomes from the parliamentary process, and more twists and turns in the tale before we have a definitive direction for Brexit.’

he said the stock market is still split into Brexit beauties – companies which make chunks of their money abroad – and beasts – such as banks and builders who are plugged into the UK economy.

among smaller firms, car supermarket Motorpoint was driven higher by Numis. The broker recognised the motor retail sector had been heavily sold off due to Brexit fears and new emissions test rules, but said Motorpoint’s growth potential and the amount of cash it was generating warranted a positive outlook. Shares climbed 3pc, or 6p, to 206p.

Faron Pharmaceuticals, which tanked in October after it said its treatment for acute respiratory distress syndrome wasn’t as effective as hoped, is fighting back, up 22.2pc, or 14p, to 77p as it said the treatment worked well for patients with a certain genetic mutation.