5th Nov 2014 08:16
LONDON (Alliance News) - Bus and train operator FirstGroup PLC Wednesday reported a rise in underlying earnings in the first half of the year, boosted by its UK bus and rail operations, and said its restructuring program is on track.
Underlying pretax profit, which excludes certain exceptional items, was GBP33.3 million in the six months to September 30, up from GBP19.6 million a year earlier, even though revenue fell 11% to GBP2.94 billion due to structural changes in rail revenues, UK bus operations that have been sold or closed, and foreign exchange movements.
"We are confident that the multi-year plans we are executing across the group will deliver sustainable improvements in shareholder value," said Chief Executive Tim O'Toole.
The company's statutory pretax profit was GBP9.9 million compared with an GBP8 million loss a year earlier, when the company incurred GBP36.3 million in costs on property sales and derivatives contracts.
It said first-half trading has been line with its expectations, with the slow pace of economic recovery in the US and parts of the UK offset by pricing and lower costs in First Student, and improved performances in First Transit and UK Rail operations.
Group operating margin increased to 3.5% from 3.1%, principally due to better profitability in UK Bus and UK Rail, the company said.
UK Rail operating profit rose to GBP40 million from GBP25.8 million, nearly doubling its margin to 3.5% while UK Bus operating profit was GBP16.9 million, up slightly from GBP15.9 million and yielding a margin of 3.8%, up from 3.2%.
Revenue from First Student in the US fell in dollar terms to USD1.01 billion, from USD1.03 billion, due to fewer operating days in the period because of the timing of the Easter school vacation, but the company said it expects revenue in the second half to be at the top end of its expected range after successful contract bidding and better pricing. It also expects to cut USD20 million in costs this year due to maintenance, procurement and fuel efficiency savings, on top of the targeted USD50 million a year by 2017. In pounds, revenue dropped to GBP605.7 million from GBP666.4 million.
Greyhound revenue increased in dollar terms to USD527 million but the strong pound meant revenue fell to GBP314 million from GBP333.7 million. The division's operating profit margin in dollars was steady at 9.5%.
In early trading, FirstGroup shares were down 0.4% at 114.60 pence.
By Ian Edmondson
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