FirstGroup in line with expectations

FTSE 250 transport firm FirstGroup said third quarter trading at the group, excluding the one-off effect of Hurricane Sandy, was in line with company expectations but remains cautious in respect of continued economic weakness.

Like-for-like (LFL) passenger revenue at its UK bus operations grew 2.1% in the quarter to December 31st 2012.

"Notwithstanding the challenging economic environment which continues to affect many of the urban areas in which we operate, we are making headway with our detailed plan to recover performance and equip the business to achieve increased revenue and patronage growth," it said in a statement.

LFL UK rail revenue increased 8.1% in the period after strong passenger growth across all of its franchises.

Greyhound like-for-like revenue grew 1.6%, with Greyhound's US operations continuing to achieve a strong performance, it said.

"Against the backdrop of a sluggish economy, operating margin performance remains in line with our expectations as a result of the actions we have taken," it added.

Meanwhile the group said its First Student business is on the path to recovery after operations were disrupted by Hurricane Sandy in late October. The storm impacted around 130 of its locations and led to the closure of schools for up to nine days. This is expected to adversely impact operating profit by $15m in 2012/13.

Despite this, its current expectations for underlying margin performance for the full year remain broadly unchanged.

Elsewhere its transit division generated good operating results from its range of operations.

FirstGroup, which issued £325m of 10-year bonds in November, is using the proceeds to pay down debt, as part of its strategy to reduce reliance on bank borrowings and extend its debt maturity profile.

Chief Executive Tim O'Toole said: "We are confident that the actions we are taking will strengthen our business and its prospects for long term growth. While there is significant work still to do, we are satisfied with the progress of the actions taken so far, though we remain cautious in respect of continued economic weakness."

"As previously stated, following the uncertainty caused by the Department for Transport's decision to delay its refranchising programme the Board held the interim dividend at last year's level. We will consider the full year dividend in May 2013, by which time the prospects for our rail division are expected to be clearer."

CJ