National Express owner Mobico has seen shares plunge after posting a drop in half-year earnings.

The coach and bus giant reported a worse-than-expected 12.7% fall in underlying operating profits to £59.9 million for the six months to June 30, down 4.8% on a constant currency basis.

It also remained in the red with statutory pre-tax losses of £7.1 million, although this was narrowed from £29.3 million a year earlier.

Shares in the firm plunged more than 20% at one stage in morning trading on Tuesday as the earnings disappointed.

The company flagged increasing competition in the UK coach sector, while it also put the earnings drop down to issues with two contracts at WeDriveU, its North America transit and shuttle services business, which have been hit by temporary operational troubles.

It posted operating losses of £9.6 million for the UK, against losses of £12.6 million a year ago, as revenues fell 3.3%.

Revenues were weighed down by a 7.2% drop in the UK coach arm, although it said this was partly due to a strong performance a year earlier when trading was boosted by rail strikes.

In a statement, Mobico said: “The competitive landscape in the UK coach sector has undergone significant change, marked by increasing competitive intensity.

“Additionally, modal competition is increasing from other sectors including rail as it recovers from industrial action and staff shortage issues.”

The group will merge the UK coach operations within its better performing Spanish Alsa business from January next year, with aims to drive cost savings and share best practice.

Despite the half-year knock to earnings, the group said it remained on track for full-year guidance.

It will look to ramp up cost cutting going forwards, it added.

Phil White, Mobico executive chairman, said: “Although our operating profit performance in the first half was mainly impacted by the under-performance of two contracts in WeDriveU, due to operational issues and a competitive trading environment in the UK, we remain confident of achieving our full-year, adjusted, operating profit guidance of between £180 million and £195 million.”

“We see significant opportunities to simplify and strengthen the group and are taking decisive action to sharpen our operational and financial performance, including additional, cost reduction plans and further leveraging Alsa’s best practice across the business,” he added.

Mr White, who had been chief executive of the then National Express Group between 1996 and 2006, returned to take the helm at the business earlier this year after former boss, Ignacio Garat, left in April following a series of profit warnings.

Shares have been severely under pressure this year due to the profit alerts and Mr Garat’s departure, with the latest declines leaving the stock down nearly 60% in the past six months.