Public transport operator Stagecoach saw an increase in like-for-like revenues in the July quarter as a strong performance in the UK offset challenging market conditions in the US.

In the three months to 25 July, the group posted a 1% year-on-year increase in like-for-like revenues from UK regional bus operations, while revenue growth in its UK London bus business was 1.5%, boosted by an increase in contract prices.

The FTSE 250 company said like-for-like revenue in its UK rail arm increased 5.5% year-on-year excluding the Virgin Train East Coast venture, while Virgin Rail Group like-for-like revenue rose by 7.5%.

However, performances in North America were less impressive, as revenue in the three months to 31 July declined 5.3%, on the back of lower demand to the Megabus arm and the end of low-margin contracts for other divisions.

London-listed stage coach said it remains on course to meet its annual expectations, but analysts at RBC said the group could struggle to progress in the 2015-16 financial year.

"UK bus outlook sees modest fare growth, rising labour costs and to us margin maintenance, let alone progression, for 2015/16 looks challenging for the industry despite falling hedged fuel costs," they said in a note.

source: Sharecast