FirstGroup on right track

30th Sep 2009 07:41

Greyhound bus operator FirstGroup said overall trading remains in line with management expectations but warned the transport industry faces a challenging year ahead."We are encouraged by the group's continued resilience in the first half of the year in delivering a good performance with overall trading in line with management expectations," the company said in a statement.The transport firm said it responded swiftly to changing patterns of passenger demand, including a cost reduction programme. The cost cuts are expected to bring more than £200m of annual savings during the year."We identified scope to further reduce indirect headcount, in particular in North America, and have now reduced headcount by over 4,000 across the group," it said.Across its divisions UK bus saw like-for-like passenger revenue is expected to increase by 2.3% in the six months ended 30 September 2009. UK Rail like-for-like passenger revenue is expected to increase 1.7%.Its North America contract business has performed well during the period with high contract retention rates over 90%.Greyhound, which represents less than 10% of Group EBIT, has seen revenues fallas a result of the weak US economy and increased unemployment, FirstGroup explained. Revenues during the period are expected to reduce by 20.3%.The group also reiterated that it would absorb a significant increase in its hedged fuel costs which are set to recover by over £100m in 2010/11."The board remains confident in the underlying strength and resilience of the group," it added.