Mobico Plc lost a third of its market value after cutting its full-year operating profit outlook, citing higher-than-expected costs.

The stock fell as much as 33% to 56.75 pence, the biggest intraday slump since March 2020. The company formerly known as National Express now expects operating profit of £175 million to £185 million, down from £200 million to £215 million, it said in a statement. It also suspended its final dividend for 2023.

Mobico’s efforts to improve profitability were thwarted by higher expenses, especially recruitment and examination costs for school bus drivers in North America. It’s now preparing to sell the North American school bus business to help improve profitability, aiming to start a sale process in early 2024.

The transportation company said it wants “to focus on opportunities with higher return potential.” A sale would “accelerate debt reduction and increase flexibility for growth investment,” Chief Executive Officer Ignacio Garat said in the release.

A previously announced cost-reduction program is on track to deliver £30 million in annualized savings and additional efforts are expected to deliver a further £20 million in savings.

Third-quarter revenue grew 10%, spurred by a 26% jump in sales at its UK scheduled coach business, with rail strikes in the country providing a significant boost.

Author: Chloé Meley and Maggie Shiltagh