(Reuters) - Infrastructure group Stobart (STOB.L) said on Thursday it would exit its rail and civil engineering business this fiscal year under a plan to offset a hit from the coronavirus crisis as it posted a steep annual loss due to higher costs.
The British company, which has already flagged a need for additional funds to ride out the pandemic, also said it intends to raise 120 million pounds ($151.30 million) through share sale and additional loans.
Stobart has been hurt by a drop in airport traffic due to travel restrictions in place to curb the spread of COVID-19. Its woes have been exacerbated by a hit from regional airline Flybe’s collapse and underperformance of the rail and civils division.
The unit, which provides specialist rail and non-rail civil engineering and management services, posted 21% fall in revenue for the year ended Feb 29, and Stobart said the business was unlikely to generate “an appropriate return for shareholders”.
The London-listed firm said it would focus on its aviation business, which has built airports including London’s Southend and provides ground handling and check-in services for airlines.
“We will focus our investment and our business in this asset (aviation business) by seeking to dispose of our non-core businesses and, in due course, monetise Stobart Energy,” Chief Executive Officer Warwick Brady said.
Pretax loss widened to 158 million pounds from 42.1 million pounds due to a 17% jump in operating costs and declining value of some assets. Revenue, however, was up 16%.
Flybe is owned by Connect Airways - formed by Stobart, Virgin Atlantic and investment adviser Cyrus Capital.
Reporting by Pushkala Aripaka in Bengaluru; Editing by Anil D'Silva