Mobico Group (LSE: MCG), formerly known as National Express, saw its shares tumble 8.3% by 09:00 GMT this morning after lowering its annual profit forecast due to ongoing audit issues affecting its German rail operations.
The FTSE 250 public transport company now expects 2023 adjusted earnings before interest and tax (EBIT) to come in between £160 million and £175 million, down from its previous guidance of £175 million to £185 million.
Additionally, Mobico will take a £70 million increase to its “onerous contract provision,” along with an extra £25 million hit.
The issues have pushed back the announcement of Mobico’s full-year results to the end of April, having been initially delayed in February when the firm revealed accounting judgements related to its German rail business required review.
In this morning’s update, Mobico attributed the problems to changes in the indices used by Destatis, Germany’s statistics office, to determine energy costs in the transport sector.
Mobico has initially assessed the impact of the revised German energy cost indices. While they expect their models for calculating German rail profitability are still valid, more work is needed to fully understand the effect of the new indices.
Mobico expects the changes to result in a reduction of around £15 million in total cost recovery over the terms of its German rail contracts, which run until 2032.
The profit warning compounds a difficult year for the company, which rebranded from National Express in May 2023. Mobico Group’s shares are down 22% year-to-date.
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