Transport group said US bus division profits will be down $15m as a result of Hurricane Sandy
Transport giant FirstGroup has reported an 8.1 per cent rise in like for like UK rail revenues for the third quarter of the financial year.
However the transport group said its US school bus division, First Student, will incur a quarterly profit loss of around $15 million (£9.5 million) as a result of Hurricane Sandy.
First said third-quarter trading for the three months to December 31 were in line with expectations, “excluding one-off effect of Hurricane Sandy”.
Last November First announced it was freezing its interim dividend at the previous year's level after posting a 42 per cent drop in first-half pre-tax profits.
First said the dividend freeze was put in place as it awaits the outcome of the UK Government's review of rail franchising.
First's winning bid to take over the west coast rail franchise was cancelled by the Department for Transport (DfT) last October after flaws were discovered in the bidding process.
Aberdeen-based First said it spent £12.3 million bidding for UK rail franchises in the first half.
First, reporting third-quarter trading results today, said a “significant amount” of its US bus operations were disrupted by Hurricane Sandy in late October 2012, impacting 130 of its operating locations along the entire eastern seaboard, with school closures in some parts running at up to nine days in total.
The group added the restructuring of its US bus division First Student “continues to underpin performance and strengthen the operating model” but adds “there is significant work still to be done”.
First said in the update: “This is expected to adversely impact operating profit by approximately $15 million in 2012/13.
“Nevertheless, our current expectations for underlying margin performance for the full year remain broadly unchanged.”
First, which also operates Greyhound buses in the US, said like-for-like growth in that division was up 1.6 per cent in the third quarter against a “backdrop of a sluggish economy”.
The group said it expanded the Greyhound Express service to new states including Louisiana, Oklahoma, Nevada and Ontario, Canada.
In the UK, First said its bus division recorded like-for-like passenger growth of 2.1 per cent in the third quarter in what it called a “challenging economic environment” affecting many of the urban areas in which it operates.
However, First said it expects UK bus margin to be “approximately eight per cent for the full year”.
First said it is “making headway” with its plans to “recover performance” in the UK bus division through a programme of disposals.
The group announced last June it was seeking buyers for seven of its operations in England, and further bus disposals across the other UK regions are also expected as the group looks to raise £100 million from its “non-core” UK bus operations.
Disposals in the UK bus division in the quarter include the sale of its Birkenhead and Chester operations for £4.5 million.
First also announced today the sale of its Kidderminster and Redditch bus businesses in north west England to Rotala PLC in a £1.5million deal.
The group said like-for-like revenue from its UK rail business rose by 8.1 per cent in the third quarter.
First said the rail division “continues to benefit from strong passenger growth across all of our franchises”.
A report published by the House of Commons Transport Committee on January 4 called for greater transparency of the rail industry's finances to “shine a light on complacent management, waste and profiteering”.
FirstGroup, which operates ScotRail, Great Western, First Capital Connect, Hull Trains and TransPennine Express, posted operating profits of £110.5 million last year from its UK rail franchises on revenues of £2.5 billion.
UK rail commuters saw their average season ticket price rise by an average of 4.2 per cent in January.
The group added in a statement: “We welcomed the publication of the independent review by Richard Brown on January 10 which called for an early return to refranchising so that the private sector can continue to provide effective and efficient passenger rail services with further performance and infrastructure improvements.
“As the UK's largest and most experienced rail operator, we remain committed to maintaining a leading position in the market.
“We look forward to receiving details on the recommencement of the franchise process and submitting further high quality bids that deliver for passengers, taxpayers and shareholders.
“During the period the Scottish Government announced that the ScotRail franchise will now end on 31 March 2015, from its previous end date of 9 November 2014.”