Rail growth just the ticket for Firstgroup

15th Jul 2011 08:21

Rail and bus company FirstGroup is quietly enjoying seeing the price of petrol go through the roof, as it is persuading more people to use its rail services.The group saw 8.5% year-on-year (yoy) like-for-like (lfl) growth in passenger revenues in its UK rail business in the second quarter of 2011, as it said the company had traded in line in the first quarter (April to June) of its fiscal year.The UK bus business saw lfl revenue growth of 0.7% yoy, which it said reflected continued steady progress against a tough regional economic backdrop.The main black spot for the business is the poor performance of First Student, its school bus business which carries six million kids in the US and Canada and 8,000 in the UK. In its last annual report the company said First Student revenues were down 2.5% and profit was down nearly 30%, prompting management to implement a recovery plan. FirstGroup says it "expects pressure on margins to continue into the first half of our financial year reflecting last year's disappointing trading performance."Elsewhere, however, the iconic Greyhound bus business in the US saw like-for-like revenue growth of 3.7%, while the UK bus business was plodding along at 0.7%.Tim O'Toole, Chief Executive commented:"I am pleased to report trading during Q1 of the new financial year is in linewith our expectations. We are encouraged by improving trends in UK Rail andGreyhound and the continued steady performance in UK Bus and First Transit. InFirst Student we are implementing our detailed plan to recover performance andstrengthen the operating model to enable the business to harness its potential.It also said discussions are ongoing with the UK Department for Transport on the proposal to extend its First TransPennine Express franchise,Investors gave the results a thumbs up, with FirstGroup up 2% in early trading.BS