FirstGroup is hampered by US weakness

FIRSTGROUP, the transport operator, reassured the City yesterday that it will hit its full-year results targets, despite being dealt a £16m blow by the heavy snow earlier this year.

The group also said it expects to deliver only moderate earnings growth in the financial year ahead, largely due to a sluggish performance from its US businesses.

“Looking ahead to the new financial year the global economic outlook remains uncertain and in particular we expect to see continued pressure on public spending budgets in North America,” chief executive Moir Lockhead said yesterday.

FirstGroup said sales at its US Greyhound bus business would be 14 per cent lower for the year to the end of March due to the continued weakness of the North American economy, while revenues at its US contract division, which includes school bus services, had not improved on last year.

“The US business seems to be the main area of weakness,” said Arbuthnot analyst Gerald Khoo.

FirstGroup said underlying sales at its British rail business had grown in the past three months and would be 2.1 per cent up for the year, while annual British bus revenues would be 1.8 per cent up. Market expectations for 2009-10 pre-tax profit are in a £197-272m range, with an average of £244m.

Shares in FirstGroup fell 15.6p to close at 359p yesterday, their lowest level for six weeks and valuing the business at £1.7bn.