Broker snap: FirstGroup's results 'reassuringly in line'

3rd Nov 2010 10:43

KBC Peel Hunt retains a 'hold' on FirstGroup after the bus and train group released its half yearly report Wednesday.Results were closely in line with the broker's forecast with pre-tax profit up 14% at £77.7m (forecast £78m), and earnings per share increase of 16% to 10.4p."The company remains on track for modest earnings growth to March 2011 (we forecast +6% to 41.6p on profit before tax of £287.7m). We are not expecting to change our forecast significantly", analyst Paul Hickman said.Net debt has reduced by £91m to £2,191m. The group has increased its cash generation target for the year from £150m to £180m, excluding disposal proceeds "which have so far generated £31m from the sale of GBRf [GB Railfreight]", the broker said."The company remains on track for its target of debt: earnings before interest, tax, depreciation and amortization of 2.5 times. Dividend increased 7.1% and confirms the group's commitment for the next three years - growth of 'at least' 7%."The broker sees the interim results as "reassuringly in line", and retains its 'hold' rating with a target price of 380p.