Mobico Group delays annual results due to German rail issues

Mobico Group (LSE: MCG) has announced a delay in the release of its annual results, causing a 13% drop in its shares at the open. The delay is attributed to the need for increased provisions related to its German rail operations.

Originally scheduled for February 29, the annual results are now expected before the end of March, with an exact date to be confirmed. The company cites challenges in the German rail sector, including industry-wide driver shortages, energy price fluctuations, and lower-than-expected energy cost recovery.

Mobico anticipates an increase of £40-70 million in the “onerous” contract provision as of December 31. This provision will be spread over the contract’s remaining duration, from 2024 to 2033. Accounting judgments made concerning the business, especially in the financial year ending December 31, 2022, are also under further review.

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The delay allows management to complete its review and gives Deloitte, the group’s auditor, sufficient time for the audit process. Mobico maintains expectations for adjusted earnings before interest and tax for the financial year 2023 to be between £175-185 million, as indicated in October’s trading update.

Despite the German rail challenges, Mobico says that this segment is projected to constitute less than 6% of the group’s adjusted EBIT for 2023. The company reports strong performances from its Spanish subsidiary, ALSA, while its UK and North American businesses meet expectations.

Mobico stock has experienced a 38% decline over the past 12 months.