The National Express Group PLC (LON: NEX) share price dipped lower briefly after news broke that some of its UK drivers working in the West Midlands were planning to strike after the company reported record profits yesterday and reinstated its dividend payout.
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However, investors largely ignored the news once it became clear that not all National Express drivers were planning to strike. Only drivers serving the West Midlands region plan to strike on March 16, 2023, as they demand higher pay, given the coach operator's improved financial performance.
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Investors in the UK have been dealing with industrial action affecting many critical businesses, including the railway industry, the National Health Service, and Royal Mail, as workers agitate for higher pay to deal with the high cost of living in the country.
A National Express spokesperson said the company was disappointed by the strike notice and urged its drivers to reconsider their actions. The quick recovery of NEX shares indicates that investors are not worried by the strike, given its limited scope.
However, the reaction might have been quite different if National Express’s entire UK workforce had decided to strike. The West Midlands is a small county with less than 3 million people. Still, the strike action by the West Midlands drivers could trigger more strikes by drivers in other areas.
Investors seem confident in the company’s prospects, but this could change depending on whether more workers join the industrial action. Meanwhile, investors may continue supporting the public transportation firm even in the face of nationwide strikes, as with Royal Mail.
Yesterday, National Express reported that its revenues surged 29% to £2.8 billion compared to the £2.17 billion generated in 2021. The company’s profits rose 39.4% to £418.1 million in 2022 from £300.0 million in 2021.
The transport company reinstated its annual dividend of 5.0p share. The striking workers cited the company’s increased profits as the primary reason for their strike since it can now afford to pay its drivers more, according to the Unite Union.
However, it is too early to tell how the strikes will evolve.
*This is not investment advice.
National Express (NEX) share price.
The National Express dipped lower before rallying higher to trade in positive territory at writing.
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