BUS and coach builder Henlys said its US acquisition of the yellow school bus maker Blue Bird had driven pre-tax profits to record levels.

Blue Bird, bought for £415m in October 1999, accounted for more than half of group turnover, which increased 91 per cent to £882.8m.

The US operation improved its share of the North American school bus market to 47 per cent last year.

Overall, the company saw pre-tax profit rise 89 per cent from £24.2m to £46m during the 12 months to December 31.

But the performance was overshadowed by a disappointing performance in the UK, where it was hit by lower demand for single-deck buses.

The group also said Canadian firm Prevost, which it jointly owns with the Volvo Bus Corporation, had struggled because of the slowdown in the US economy. That dented confidence with coach operators and left Henlys' share of operating profits about 45 per cent lower at £11.2m.

The group also said it stood to make major savings from TransBus International, its joint venture with the Mayflower Corporation.

TransBus began trading at the start of this year and is Europe's fourth largest bus and coach builder. It incorporates the Denis, Alexander and Plaxton brands. Plaxton employs 700 people in Scarborough, North Yorkshire.

Henlys said economies of scale would create savings on production and distribution, as well as provide a platform for a "concerted export sales drive".

Shareholders will receive a total dividend of 20.4p, compared to 19.2p a year earlier