First Group

The Daily Telegraph - Business - - Business Comment -

Com­pen­sa­tion pay­ments due to track clo­sures were a key rea­son for a rail profits boost at First Group, prompt­ing chief ex­ec­u­tive Tim O’Toole to warn against over op­ti­mistic ex­pec­ta­tions for the di­vi­sion in the near term, writes Bradley Ger­rard.

Net­work Rail makes the pay­ments to train com­pa­nies if its work pre­vents ser­vices run­ning. Parts of the Great West­ern Rail­way line have been closed in­ter­mit­tently be­cause of an elec­tri­fi­ca­tion scheme. The pay­ments meant rail mar­gins rose 0.9 per­cent­age points to 4.6pc for the six months to Sept 30. But Mr O’Toole warned he was “cau­tious on the rate of pas­sen­ger growth” for the rest of its trad­ing year, pre­dict­ing full-year mar­gins would be be­low the 4.2pc level in 2016-17.

UK rail, First Group’s largest area by oper­at­ing profits, should ben­e­fit from the Lon­don Water­loo-based South West­ern rail fran­chise it took con­trol of in Au­gust.

Its Puerto Ri­can con­tracts were hit by se­vere hur­ri­canes, knock­ing $6m (£4.5m) off First Tran­sit’s oper­at­ing profits (£20.9m). Grey­hound suf­fered from higher main­te­nance costs and grow­ing com­pe­ti­tion from low-cost air­lines.

First Group’s Grey­hound arm was hit by higher main­te­nance costs

Tim O’Toole Chief ex­ec­u­tive

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