FirstGroup bolstered by strong UK rail growth

published 9 November 2011

Rail and bus company FirstGroup said overall trading for the first half of the current financial year was in line with company expectations.

The group, which transports more than 2.5bn passengers every year, said revenue was up 3.2% to £3.168bn for the six months to 30 September while adjusted operating profit rose to £163m from £170.4m in 2010 despite a reduction in First Student profits.

The reduction was partly offset by higher profits and margin improvement in all the other businesses, FirstGroup said.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748.jpg

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Commenting on the group's operations, chief executive Tim O'Toole said priorities in its UK Bus operations are to, "manage the immediate challenges presented by a softening macroeconomic outlook and reduced funding to the industry while also taking the necessary forward looking decisions to equip the business to deliver increased growth."

"Strong passenger demand continues across all of our rail operations and we look forward to building on our market leading position and developing further opportunities once the Department for Transport's new rail franchising programme commences in 2012."

Elsewhere the transformation of Greyhound was delivering results, with good revenue growth and margin improvement. First Transit saw continued growth with a strong pipeline of opportunities.

There was further strong growth in UK Rail, helped by a three extension to the FTPE franchise to 2015.

The group has proposed a dividend payment of 7.62p, up 7% from last time. Net debt at the end of September was £2.058bn, down 6% from last year.

Looking ahead to future trading O'Toole is optimistic. "With market leading positions and operations that are fundamentally strong, together with our clear focus on creating a stronger business for the future, the Group has good prospects to deliver long-term value for shareholders in a sector which is a key enabler of economic growth."