Henlys shrugs off American slowdown

Henlys, the UK bus and coach builder, which is largely based in North America, shrugged off the US economic downturn yesterday by producing better-than-expected profits.

Shares in the company rose 17 per cent to 115.5p after Henlys reported underlying pre-tax profits of £20.4m in the nine months to the end of September on sales of £523m against profits of £31.7m on turnover of £717m in the preceding 12-month period. The consensus of analysts' forecasts had been for nine-month profits of about £18.5m.

The group, which took over the US bus builder Bluebird for $660m two years ago, has 80 per cent of its operations in the US and Canada and so has been affected by the North American slowdown and the after-effects of 11 September.

Sales of school buses, which themselves account for 80 per cent of North American turnover, were down by 9 per cent while demand for touring coaches also declined. However, sales of motor homes and city buses both rose.

Allen Welsh, Henlys' chief executive, said that after an 18 per cent cumulative decline in school bus sales over the past two years, demand was likely to be flat this year. Although demand for school buses is less vulnerable to the economic cycle than other forms of transport, Mr Welsh said that many local education authorities in the US had been holding off from renewing their fleets longer than usual.

Bluebird has started producing right-hand drive yellow school buses for trials being conducted in the UK by First Group. Mr Welsh said Henlys would be keen to assemble or even manufacture yellow school buses in this country if demand was high enough. Henlys and First Group have approached the Government for relief from import duties and operating subsidies to make local assembly economically viable.

Henlys also has a 30 per cent share in the UK's biggest bus builder TransBus, which is a joint venture with the engineering group Mayflower. The operating profit contribution from TransBus for the six months to the end of June was £5.1m, helped by a 9 per cent increase in bus useage over the period.

Mr Welsh said he was hopeful of continuing strong growth in bus demand in the UK, particularly in London when the £5 congestion charge comes into effect next April.