First Group floun­ders as US arm takes a pound­ing

Scottish Daily Mail - - City & Finance - by Francesca Washtell

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.

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