FirstGroup says bus recovery remains on track

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Transport firm FirstGroup today said its UK bus business continued to make good progress along the road to recovery, with full year passenger revenues expected to rise by 2.4 per cent and a further £80 million in disposals.

The Aberdeen-based group, which last year won the West Coast rail franchise before seeing the contract torn up after the UK government discovered flaws in the bidding process, is targeting £100m of disposals at its bus arm to focus on high-growth areas.

In a trading update ahead of the firm’s full-year results, chief executive Tim O’Toole revealed two deals worth a total of about £80m. London bus operator Metroline is to buy five of the group’s depots in the city, while Australian company Transit Systems Group is acquiring a further three.

O’Toole added: “We are working through our comprehensive plan to recover performance and equip our UK bus business to achieve sustainable revenue and patronage growth, and are seeing early positive signs in some of our markets.”

Overall, FirstGroup said trading during the year to 31 March was in line with management expectations. The group, which held its interim dividend steady following the West Coast debacle, said it would consider its full-year dividend before publishing its results on 22 May.

Shore Capital analyst Greg Johnson said the broker maintained its forecast of a pre-tax profit of £273 million for the full year following today’s trading update.