Bus and trains group FirstGroup's (LON:FGP) UK Rail division is outperforming the company's expectations.
The UK and North America-focused transport operator said trading in the first half of its fiscal year had been in line with expectations, and that its turnaround programme remains on track, despite difficult conditions in some of its markets.
UK Rail saw strong growth in passenger numbers in the six months to the end of September, underpinning expected like-for-like (LFL) passenger revenue growth of around 7%.
Financial performance of the rail division was towards the top end of the company’s expectations, FirstGroup said.
The UK Bus division saw commercial passenger revenues rise more than 2% year-on-year, but this was partially offset by weaker concessionary revenues. Overall, LFL revenue growth for the first half if likely to be around 1.3% when the final numbers are totted up.
Its school bus division, First Student, achieved an average price increase of some 5.3%, higher than previously seen, while the contract retention rate was modestly ahead of the company’s expectations at around 85%.
The iconic Greyhound bus business continues to face tough times, with LFL revenues expected to fall 6.2% year-on-year.
“We continue to progress our transformation plans, which will drive sustainable improvements in the financial performance and cash generation of the group, despite a more challenging trading environment in some of our markets in the period,” said Tim O’Toole, chief executive of the company.
“For the full year, we expect the progress of our non-rail businesses to largely offset the reduced size of our UK Rail franchise portfolio compared with the prior year, and remain confident that our multi-year transformation plans will achieve our medium term goal of sustainable cash generation from improved margins," he added.