FirstGroup makes a fast buck
FIRSTGROUP became the latest train operator to signal the boom on the railways with profits soaring by 35% last year.
The Great Western train operator out of Paddington showed just how well it has done out of the recent merry-go-round of rail franchise changes. It reported an £18m growth in train profits to £67m in a year when it was ejected from two franchises but won three others.
The latest acceleration of the gravy train comes just weeks after National Express reported a 76% leap in its rail profits, and Stagecoach told the City to upgrade their profit forecasts for South West Trains and part-owned Virgin Rail by more than £10m.
FirstGroup had been delivered a high profile rebuff last year when it was effectively sacked from the Greater Eastern franchise out of Liverpool Street and also lost the heavily-subsidised North Western franchise.
However, it has more than made up for those losses with the addition of Thames Trains to Great Western, the already fast-growing new TransPennine Express, and the previously underpeforming ScotRail. As a bonus, FirstGroup also reported a strong performance from its GB Railfreight business bought in 2003.
Chief executive Moir Lockhead said the group was confident of adding to those rail profits by winning further franchises. Though it lost out in its recent bid to win the East Main Line services out of King's Cross, FirstGroup has been shortlisted for four other franchises, bidding processes that have cost the company nearly £20m over the past two years.
The outstanding bids are for an enlarged Greater Western, the new integrated Kent franchise including high-speed services in St Pancras, the choc-a-block but lucrative Thameslink cross-London commuter service and the Docklands Light Railway out to Canary Wharf.
The rail performance proved a boon for FirstGroup as profits at its two other main businesses slowed. Profits were down 4% on the buses hit by a strike at its Sheffield depot and by rising fuel costs.
In the US, where it is America's second-largest operator of Yellow Buses, profits were down by 4%.
Group pre-tax profits rose by 5% to £128m in the year to 31 March and the dividend rises 10% to 12.815p. FirstGroup shares, which have fallen 15% in recent weeks, rose 1p to 321p.
