Mobico Group (LON:MCG) reported higher revenue and adjusted operating profit for the 15 months ended March 31, 2026, while outlining further cost reductions, contract restructuring and balance-sheet actions intended to reduce leverage.
Revenue rose 6% to £3.4 billion compared with the prior 15-month period, while adjusted operating profit increased 18% to £231 million, Group CFO Brian Egan said. Statutory operating profit was £12 million, reflecting significant adjusting items. Free cash flow totaled £132 million, lower than in the 12 months to December 2024, largely because of cash outflows related to the school bus business before its July 2025 sale.
Alsa growth and German Rail restructuring
Chair Phil White said Alsa, Mobico’s Spanish and international transport business, again delivered record results and is becoming increasingly important to the group. In the first quarter, Alsa revenue increased by £29 million and adjusted operating profit rose by £6 million. Egan said performance was balanced across long-haul, regional, urban, health transport and diversified operations.
Alsa also recognized its first technical service fee from the Qiddiya contract in Saudi Arabia. Operations in Morocco have stabilized following changes in December and remain profitable, according to Egan.
Group CEO Paco Iglesias said Alsa had grown revenue by more than 10%, with particularly strong expansion in international and diversified businesses. He also pointed to a new contract in Ibiza, Spain, and said the company had been named preferred bidder for a Medina, Saudi Arabia, contract involving more than 220 buses to be operated with a local partner.
In Germany, Mobico has amended its rail contracts to reduce risk. White said the RME contract was shifted entirely from a net to a gross contract, improving profitability and removing revenue risk. The loss-making RRX contract was shortened by three years. Together, the changes mean German rail operations are expected to be at least cash neutral over their remaining contract lives, he said.
German Rail delivered a £12 million first-quarter improvement in operating profit, including a £6 million benefit associated with the RRX 1 emergency award contract operated between 2022 and 2023. Iglesias said operations had improved, with the business having the drivers needed to operate services and experiencing fewer penalties.
Cost actions and divisional performance
Mobico said it remains on track to deliver £75 million of cost savings in 2026, equivalent to £100 million on a full-year run-rate basis. Iglesias said the group had identified more than 100 initiatives expected to generate £100 million of cash savings on a run-rate basis, including more than £25 million in overhead and central-expense reductions achieved so far.
Central function costs nearly halved to £2.9 million in the first quarter, although Egan said higher audit expenses offset much of the savings expected for the year. The company expects audit fees to normalize after it returns to its usual reporting cycle.
- WeDriveU: First-quarter operating profit improved by £4 million, mainly because losses on the WMATA contract in the prior-year period were not covered by the owner’s contract provision. Mobico has addressed two significant loss-making U.S. contracts and is focusing on asset-light opportunities, including universities and commuting services.
- UK Coach: Adjusted operating profit declined by £4 million in the first quarter amid high competition and a supplier legal-claim provision taken in March. Mobico said it expects a positive outcome on the claim in the next reporting period. The company plans to reduce its owned coach fleet by half, streamline routes and deploy Alsa’s revenue-management tools.
- UK Bus: Operating profit worsened by £4 million, reflecting lower passenger volumes, higher costs and changes in supplier-rebate treatment. The result included an £18 million subsidy from Transport for West Midlands. Mobico expects the business to be broadly break even for 2026 with local-authority support.
Cash flow, debt and legacy liabilities
Mobico generated £55 million of free cash flow in the first quarter, including £22 million of working-capital inflows, after £32 million of maintenance capital expenditure, £4 million of pension-deficit contributions and £14 million of interest payments. It expects 2026 capital expenditure of £135 million because of previous vehicle orders, but remains committed to reducing annual capital expenditure to £120 million from 2027.
Iglesias said the lower capital spending would come from a combination of buying fewer vehicles after exiting loss-making contracts, negotiating fleet-age extensions with transport authorities, purchasing more affordable vehicles and managing fleet deployment more efficiently.
Adjusted net debt stood at £1.1 billion at March 31, down from £1.25 billion at December 31, 2024. Covenant gearing was 2.9 times, which Egan said remained within tolerance. The company had total liquidity of £800 million, including £240 million of cash, and said 86% of group debt was fixed-rate at a weighted average rate of 3.5%.
Legacy liabilities remain a key constraint on debt reduction. These include a £62.5 million provision for retained school bus claims, a school bus purchase dispute capped at £35 million, approximately £130 million in German public transport authority advances, and a £53 million U.K. pension deficit. Egan said the German advances involve historic penalties and subsidy overpayments and are expected to be repaid over contract lives, subject to discussions with the relevant authorities.
Balance-sheet review continues
White said debt reduction is the board’s “absolute priority,” and Mobico is working with advisers to review strategic and financial options to de-leverage the business. Asked whether an equity issuance could be ruled out, White said the company was “not ruling anything out at all at this stage.”
The company is also pursuing the monetization and de-risking of UK Bus assets in the West Midlands ahead of the transition to franchising. Egan said any transaction would be expected to have little effect on covenant gearing but could remove lease obligations, pension exposure and annual funding risk associated with the loss-making business. Mobico said it expects to provide a further update on its balance-sheet plans later in the year.
About Mobico Group (LON:MCG)
Mobico Group is a leading international transport operator, diversified internationally and by business area; with operations in North America, continental Europe, the UK and North Africa.
We provide safe, efficient, clean and reliable shared mobility solutions to cities, businesses, education, healthcare and customers.
We are internationally diversified with a balanced portfolio of high quality contracts and market-leading customer brands.
We help millions of people around the world every day, getting them safely and reliably to work, school, to family and friends.
We are leveraging our network economies to shape the future of multi-modal transport.
