Greyhound slow out of the traps to weigh FirstGroup's first half

Published on Wednesday 4 November 2009 20:20

TRANSPORT firm FirstGroup suffered a slump in profits in the first trading half after the US recession dented takings at its Greyhound inter-city coach business.

The Dallas-based operation – acquired by the rail and bus group in 2007 – posted a 71 per cent dive in operating profits to $23.5 million (14.4m), triggering a 44 per cent drop in company pre-tax profits to 30.3m.

However, FirstGroup said revenue trends at Greyhound, which contributes about 10 percent of group profit, were "showing signs of improvement". Group sales grew 5 per cent to 2.9 billion.

An increase of 74m in fuel costs in the current financial year also hurt FirstGroup, although it said it expected this to reverse in 2010-11.

The company has axed more than 4,000 jobs in a bid to save 200m in the full year.

FirstGroup, based in Aberdeen, cut 4,400 jobs across its UK and North American operations in the first-half, including 1,130 posts in UK bus and 610 in UK rail.

Bus profits, also hit by higher fuel costs, fell 15.3 per cent to 50.8m. The decline came despite cost reductions and like-for-like passenger revenues up 2.4 per cent.

UK rail profits rose 5.2 per cent to 50.8m after like-for-like passenger revenues increased by 1.7 per cent – much weaker than the 9.8 per cent achieved a year earlier. FirstGroup said the division's profits had been hit by stronger demand for advance purchase and other discounted tickets, along with weaker sales of first class fares.

First Great Western and Hull Trains saw revenues decline by 0.1 per cent and 5.9 per cent respectively in the six months, while First Capital Connect, First ScotRail and First TransPennine Express all posted growth, albeit down on March.

Sir Moir Lockhead, the chief executive of FirstGroup, said: "British rail is levelling out now, particularly in the London commuter networks, and the trend has flattened over the last few weeks."

The interim dividend in the six months to end-September was raised 10 per cent to 6.65p.