FirstGroup's first-half performance wasn't quite as stunning as the statutory results imply. Strip out last year's restructuring costs and the bus and rail company's adjusted pre-tax profits grew 14 per cent, to £77.7m, mainly due to a lower finance bill as management pressed on with its ambition to cut net debt.
Underlying operating profits still crept up by a healthy 3.5 per cent, however, thanks to the ongoing recovery in passenger numbers after the recession and cost savings on the group's US Greyhound network and UK local bus services. The gains were partially offset by a disappointing performance from the US school bus operation - FirstGroup's largest division and once its great growth hope. Budgetary pressures have forced schools to charter fewer buses and in some cases consolidate routes, driving divisional operating profits down from £38.5m to £28m.
Profits also fell at the group's UK rail franchises, mainly because it had to pay the government more for the privilege of running the First Great Western line. But that was expected, having been inscribed in the original licensing agreement. Analyst Gerald Khoo at Arbuthnot Securities says the £0.7m fall in UK rail's operating profits was a "good result" in the circumstances.
JPMorgan Cazenove expects full-year adjusted pre-tax profits of £284m and EPS of 41.2p (from £264m and 39.5p in 2010).
FIRSTGROUP (FGP) | ||||
|---|---|---|---|---|
| ORD PRICE: | 402p | MARKET VALUE: | £1.93bn | |
| TOUCH: | 401.9-402.4p | 12-MONTH HIGH: | 428p | LOW: 331p |
| DIVIDEND YIELD: | 5.3% | PE RATIO: | 12 | |
| NET ASSET VALUE: | 165p* | NET DEBT: | 270% | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2009 | 2.96 | 28.6 | 3.6 | 6.65 |
| 2010 | 3.08 | 82.0 | 11.4 | 7.12 |
| % change | +4 | +187 | +217 | +7 |
Ex-div: 5 Jan Payment: 2 Feb *Includes intangible assets of £2bn, or 416p a share | ||||
