FirstGroup on track for 'good progress' despite tough bus and rail trading
Transport giant FirstGroup said a Brexit boost from the weak pound was helping keep it on track for the full year , but warned that trading remains tough in its bus and rail arm.
The group, which runs a school bus operation in the US as well as the Greyhound long-distance coach business, posted a 12.8% jump in revenues for the final three months of 2016 thanks to the pound's slump against the US dollar.
With currency changes stripped out, revenues in its third quarter remained flat.
FirstGroup said its under-pressure bus business was hit amid "mixed Christmas trading" on the high street, as well as ongoing woes with traffic congestion in some areas.
It saw like-for-like bus passenger revenues fall 0.6%, although this marked an improvement on the 1.3% fall seen in its first half.
FirstGroup has been hit as bad traffic has affected passenger demand in many of its markets, particularly in the North and Scotland.
The firm saw like-for-like passenger revenues rise by 1.1% in its rail business, which includes the Great Western and TransPennine Express UK rail franchises and Hull Trains, but said growth was held back by a slowdown across the industry.
The Great Western franchise was also knocked by infrastructure upgrade work taking place on the network, it added.
FirstGroup said it was continuing to support investigations into the tragic crash on its Croydon Tramlink line last November, which killed seven people and injured more than 50.
It is also working closely with Transport for London and others to assist those affected by the incident.
Shares lifted 4% as c hief executive Tim O'Toole said the group was set to make "good progress" for its full year.
He added: " Our substantial North American operations are delivering encouraging performances and are benefiting from currency tailwinds, but we continue to experience tough trading conditions for our First Bus and First Rail operations in what remains an uncertain UK macroeconomic environment."
Analysts at Shore Capital said FirstGroup had delivered a "strong" trading statement and praised the performance of the North American arm, which accounts for around 80% of operating profit.
The third-quarter results showed that its First Student operation saw revenues rise 1% in the third quarter, with First Transit turnover up 5.5% and Greyhound revenues 1.2% higher.