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Underlying Profit Jumps At FirstGroup plc

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FirstGroup (LSE: FGP) — the transport operator with businesses in the UK and North America — filed its half-year results to 30 September 2013 this morning, and its share price is currently up just over 1.5%.

Underlying pre-tax profit jumped 43.7%, to £28.3m from 2012’s £19.7m, but on a statutory basis there was a loss of £8m, resulting from a combination of amortisation charges, ineffectiveness on financial derivatives, exceptional items and losses on the disposal of properties.  However, underlying operating profit grew 10%, and 44.3% on a statutory basis.

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In highlights from its various operating divisions, FirstGroup said that First Student is “on track” with its recovery programme, First Transit saw continued good growth in both renewals and new business, the core market of its US Greyhound operation was affected by US economic conditions, although summer trends showed “signs of improvement”, UK Bus gave “early positive signs” from plans to enhance  and UK Rail saw “solid passenger revenue growth and operating performance”.

Commenting on the results, Chief Executive Tim O’Toole said:

Over the past six months, we have worked hard to ensure we are positioned to deliver on our potential. We have strengthened our balance sheet through the rights issue, continued to drive the significant number of incremental operational enhancements required to yield better financial returns, and are making disciplined investments to benefit from the opportunities we see in our markets. We are focused on the task of meeting our medium term financial objectives including our revenue, margin and return on capital targets, while continuing to improve the services we deliver for our customers. 

“Although it is early days in our multi-year plan to improve our returns, resilience and growth prospects, we are seeing clear indications that we are making progress. While there remains a significant amount to be done, we believe the foundations are now in place to deliver on our market-leading potential.

At its current 118p, FirstGroup’s share price is down 44% so far this year. That’s primarily due to its plunging over 40% back in May following the “triple-whammy” news of a rights issue, a dividend cut and profit warning in its preliminary final results, and the announcement that chairman Martin Gilbert would leave when a successor is found. That hasn’t happened yet, but it is, apparently, “a process that is well underway and making progress“. 

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> Jon doesn't own shares in FirstGroup.

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