FirstGroup on track with forecasts

Shares in Aberdeen based buses and trains operator FirstGroup rose over 4 per cent on Wednesday after it said trading during the first quarter of the new financial year is in line with company expectations.

FirstGroup, which experienced a significant share price drop after its surprise profits warning in March, said it continues to see strong passenger and revenue growth in its UK Rail division whilst developing future opportunities. Like-for-like passenger revenue increased by 8.2%.

The UK's largest bus operator said it UK Bus unit is executing plans to reform the operating model and achieve sustainable growth.

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"We have accelerated our programme to reposition the portfolio and place the business on a firm footing to achieve sustainable growth in patronage and revenue," it said in a statement. The bus division saw like-for-like passenger revenue increase by 2.2% despite challenging economic conditions.

"The combined effect of the outlook for trading together with the actions to reposition the UK Bus portfolio is expected to result in the group's net cash flow being broadly neutral in 2012/13," the group said in a statement.

"We have leading positions in a sector that is a key enabler of economic growth and we are confident that the actions we are taking will strengthen the business for the future. Therefore, reflecting its longer term view, the Board remains committed to its current policy of dividend growth of 7% through to the end of the financial year 2012 /13."

FirstGroup said it remains encouraged by Greyhound's performance with like-for-like revenue up by 2.8%. It has seen a slight reduction in the growth rate from the previous quarter reflecting lower fuel pump prices.

Meanwhile its transit division continues to perform well with trading in line with group expectations. Its First Student business is now set on the path to recovery after facing cuts on school board budgets, it said.

CJ