First Group flounders as US arm takes a pounding

FIRST GROUP flopped as troubles with its US bus business sent the travel group much deeper into the red.

Aberdeen-based First Group made a loss of £187m in the six months to September 30.

This compared with a £4.6m loss in the same period of last year.

It was pummelled by a slew of charges, including £15.4m of restructuring costs and a £59.3m insurance charge in North America. But it was hit hardest by a £124.4m charge to reflect that it now believes its US bus arm, known as Greyhound, is less valuable than it previously thought.

Revenue in the Greyhound division fell 7.1pc as the company said fewer immigrants were using the service to travel to big cities after they arrive in the US.

First Group is in the process of selling Greyhound off – but chief executive Matthew Gregory said this would not affect the sale and that talks with several bidders were ‘well advanced’.

But investors were clearly more sceptical, with shares in the midcap group plunging 18.5pc, or 23.9p, to 105.4p. The Greyhound woes somewhat obscured other interesting nuggets in the halfyear results, such as that more passengers are paying with contactless cards or mobile apps rather than cash for the first time.

Elsewhere among the mid-caps, Ukrainian iron ore miner Ferrexpo slid 0.4pc, or 0.55p, to 129.5p after it named Roman Palyvoda, who is in the company’s accounting division, as acting finance chief.

The company has had a tumultuous year amid a row about possible links between chief executive Kostyantin Zhevago and a charitable trust called Blooming Land. Ferrexpo has said funds given to the charity may have been misappropriated, while Zhevago temporarily stepped down last month over a scandal related to a company he used to run in Ukraine.

Defence group Qinetiq reached a record high as revenues rose 16pc to £486.5m on the back of its US expansion. Shares in the weapons designer, which also sells bomb disposal robots, surged by 9.2pc, or 29.6p, to 351.6p.

Premier Oil shares were also on the up (0.3pc, or 0.26p, higher to 86.94p) as it said its full-year oil production would be at the upper end of guidance.

Chief executive Tony Durrant added that so many potential buyers were interested in buying its Mexico assets that it has had to push back a deadline for bids to give them more time to prepare.

The FTSE 250 as a whole fell 0.3pc, or 57.98 points, to 20231.8, while the premier FTSE 100 index closed 0.8pc, or 58.45 points, down at 7292.76.

A number of stocks going exdividend – meaning anybody who bought their stock from yesterday won’t get the next investor payout – dragged on the Footsie, as it does most Thursdays.

Sainsbury’s (down 2.3pc, or 4.7p, to 201.3p), Royal Dutch Shell (down 1.7pc, or 40p, to 2285p) and

Glaxosmithkline (down 2.2pc, or 38.2p, to 1701.2p) were among yesterday’s ex-divis.

Private equity and investment group 3i was another faller. It dropped 4.6pc, or 51.5p, to 1073.5p after posting a 10pc total return but keeping a ‘cautious’ outlook on making new investments.

Ocado, on the other hand, was a bright spot for the blue-chip index. The online grocer rose 2.1pc, or 23.5p, to 1157p, after it said it will build an automated warehouse in the state of Wisconsin for US retail giant Kroger.

It is the sixth warehouse to come out of a partnership between the two firms. Southend Airport-owner Stobart Group was on the wrong side of investors after it suspended its dividend to plough more cash into expanding the business.

Shares fell 4.9pc, or 6p, to 117p.