North east-based FirstGroup said the foundations for growth were now in place despite the public transport firm racking up an £8 million half-year loss.
Although still in negative territory, the reverse by the Aberdeen-based group for the six months to September 30 represented a significant improvement on the £20.6m pre-tax loss posted at the same juncture in 2012.
Underlying profits – which strip out exceptional items – saw a 43.7% improvement on the previous year at £28.3m, while revenues also climbed by 1.6% to £3.3 billion.
The firm said it had traded in line with management expectations despite “continued headwinds” in some of its core markets.
It also said it was making progress with a four year £1.6bn investment plan designed to raise retruns, enhance growth and place the group on a “sustainable path to incraesed value creation.”
Revenues in its UK bus arm fell 14% to £490.7m after it sold off its London-based operation, while operating profits fell 18% to £17.3 million as higher fuel costs and the absence of last year’s Olympic Games weighed on the business.
However, First said it had seen saw underlying growth in passenger volumes of 0.7% in the period, the first such rise since 2008.
The company’s train operations – which included ScotRail in Scotland – achieved a 5.7% like-for-like increase in passenger revenues in the half-year period while underlying rail passenger volumes rose by 3.6%
It is bidding to take over a number of rail franchises and also plans to apply to run the East Coast mainline route.
Chief executive Tim O’Toole said the company was now on a more even keel.
“Over the past six months, we have worked hard to ensure we are positioned to deliver on our potential,” he said.
“We remain confident that the trends toward increased urbanisation and greater congestion will generate significant opportunities for our business, and that we are returning to the strength necessary to drive sustainable, long term growth and increased shareholder value.
“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.”
Chairman Martin Gilbert – who announced his intention to step down from the position earlier this year – said First was making progress.
“In recent years, the external headwinds from the global economic downturn, reduced government support for public transport and the pausing of the UK rail re-franchising programme have been significant,” Mr Gilbert said.
“We took action across a number of fronts to mitigate the effects of these headwinds, we have repositioned the business portfolio where necessary, activated root-and-branch transformation programmes throughout our underperforming divisions, strengthened the balance sheet through the recent rights issue, and committed to a substantial £1.6 billion investment programme over the next four years to raise returns, enhance growth and put the group on a sustainable path to increased value creation.”