TRANSPORT giant FirstGroup has insisted its turnaround remains on track after unveiling a 13 per cent rise in annual profits.
The Aberdeen-based group has also started the search for a new finance director after Chris Surch, who has held the role for the past three years, decided to retire for “personal reasons”.
Chief executive Tim O’Toole told The Scotsman Surch, previously finance chief and acting boss of waste management firm Shanks, “took a look at the pressures of this job and his desire to spend more time with family and friends, and decided he wanted to pull back from an executive full-time position”.
Yesterday’s results show FirstGroup’s operating profits rose to £303.6 million for the 12 months to 31 March, up from £268m a year earlier and in line with City forecasts, although it warned of a “substantially lower” contribution from its rail division, which lost the ScotRail and Caledonian Sleeper franchises.
O’Toole said: “We were particularly disappointed about ScotRail, given it was such a great operation, but we have to move on and rebuild the portfolio. There’s still two-thirds of the network to be franchised over the next couple of years so there’s a lot to play for.”
The group has been told it can keep running the Great Western service for at least another four years, while its TransPennine Express joint venture has been extended until April 2016.
Shore Capital analyst Martin Brown said the broker was “very encouraged” by the results, adding: “We believe the turnaround is well under way and over time the operating results will now begin to markedly improve.”
FirstGroup launched a £615m cash call in 2013 to tackle its debt pile of almost £2bn, much of which stemmed from its 2007 acquisition of US bus firm Laidlaw.
Net debt rose to £1.4bn by the end of March, from £1.3bn a year earlier, due to lost rail franchises and currency effects.
O’Toole said: “We still have challenges but if you look at the turnaround plan we set out two years ago, we’re where we said we would be overall and that gives us confidence about finishing the job successfully.”