Scottish public transport giant FirstGroup yesterday said it remained committed to the UK rail sector despite its disappointment over losing the ScotRail franchise.
Shares in the Aberdeen-based bus, coach and train operator pushed ahead early yesterday after it revealed an almost 70% increase to £33.3 million in adjusted pre-tax profits for the half year to September 30.
The uplift came despite a 10.9% drop-off in revenues in the period from £3.3 billion in the first six months of last year to £2.94bn this time round.
FirstGroup, which is saddled with net debts of £1.4bn, said it was trading in line with management expectations and its multi-year transformation programme was on track.
It said its First Student business had enjoyed above-inflation price hikes in the period, its Transit division had delivered a “good financial performance” while its Greyhound coach division had seen continued revenue growth despite its customer base having “not yet” seen the benefits of the wider economic recovery.
The firm said its UK bus business remained on track as a result of actions to increase passenger volumes and control costs and its rail business had seen “robust” passenger revenue growth and a strong operating performance in the period.
Chief executive Tim O’Toole said the business was on course to meet its financial targets for the full year, with the majority of profits expected to be generated in the second half due in large part to the weighting of its school contracts in North America.
However, he bemoaned the group’s recent lack of success in the UK rail franchising market.
“In the period we welcomed the news that the Department for Transport intends to negotiate a longer direct award to at least March 2019 for our largest rail franchise First Great Western,” Mr O’Toole said.
“We were one of three bidders shortlisted for the TransPennine Express franchise competition from February 2016 and we are also in negotiations for a direct award to operate the franchise up until then.
“Although we were very disappointed not to secure any of the franchise competition awards announced in the period, it does not change our medium-term objective for rail franchising which is to achieve earnings on a par with the last round of franchising, with an acceptable level of risk.
“We are confident that the multi-year plans we are executing across the group will deliver sustainable improvements in shareholder value.”
Shares in FirstGroup, which employs around 117,000 staff across its global operations, closed up 3.60 points at 118.70 yesterday.