Interim figures due out this week are likely to indicate a slowing in the rate of growth of the Perth-based company's trains division while bus travel holds up.

One analyst said: "We are nervous about the impact of the slowing economy and how job losses may mean fewer passengers."

While the company is on track to post a 15% rise in profits to £201m over the full year, its relatively recession-proof bus division will fare better than its rail business, which operates the East Midland and South West franchises.

The company is bidding for the South Central franchise serving the south of London to the coast. A preferred bidder will be announced in the summer.

Tony Shepard, analyst at Charles Stanley, described Stagecoach's business as "relatively resilient" in a downturn, but said rail growth has slowed to 8.3% in the past six months from 13.6% in the year to April.

More commuters are choosing to travel by bus to cut costs during the credit crunch as it is a relatively cheap form of transport.

Around two million UK passengers travel on Stagecoach buses every day in 100 towns and cities in the UK. The firm has a fleet of around 7,000 buses.

Shepard said: "While I think the results will be positive, I'm more concerned about how the rail business will do and that will be the main talking point."

Passenger numbers on its South West franchise, in particular, are likely to decline, according to Shepard. It is a popular commuter route for workers travelling into the City of London, but its business will be hit by lower volumes due to job-cutting as the UK moves into recession.

He added: "Unfortunately, the timing of the economic slowdown is a worry because Stagecoach needs continuing strong revenue growth to maintain rail profitability as the rail subsidy declines sharply over coming years."

Last month, analyst Panmure Gordon downgraded its earnings-per-share forecast for Stagecoach for 2009 from 23.8p to 21.5p, and for 2010 from 24.9p to 22.5p.

The downgrades reflect the more cautious rail outlook, in which growth rates may decelerate in the coming year due to the ongoing economic uncertainty.

Stagecoach has said it is ready to implement cost savings in its rail businesses "if and when appropriate", but its bus operation is looking healthy.

However, the company will be expected to quantify how it has been affected by the rising cost of fuel over the summer and how its price hedging strategy has worked.

Bryan Johnston, director with private client investment manager Bell Lawrie, has predicted that Stagecoach's trading will improve from December 2008.

He said sales for the year to April 2009 are forecast to come in at £2bn, rising to £2.2bn the following year.


Pub firms struggling after new duty hike

Nathalie Thomas
CHANCELLOR Alistair Darling will face further opposition over his decision to hike beer duties this week, with two major pub firms tipped to announce plummeting sales and profits.

The Chancellor's decision to increase duties on beer by 8% in last week's Pre-Budget Report triggered an outcry, with the British Beer and Pub Association declaring Darling had served a "death warrant" on pubs.

Analysts are expecting Greene King's interim figures on Tuesday to reflect a considerable knock from the duty hikes introduced by the Government earlier this year. With last Monday's announcement, annual profits at the group, which owns Belhaven, are tipped to fall by 13% to £123m.

However, Green King's Loch Fyne restaurants and its Hungry Horse chain are thought to have held up well thanks to strong food sales.

Marston's, which owns the Pitcher & Piano brand, reported "testing" trading conditions in a pre-close update earlier this month.

Dresdner Kleinwort analysts forecast a 10% fall in pre-tax profits to £88m when the company presents full-year figures on Friday.

The Government was forced into an embarrassing retreat over its 8% increase in duty on spirits last week when the Treasury admitted it had got its sums wrong. The rise was revised down to 4% which is designed to offset the reduction in VAT from 17.5% to 15%.