A weaker pound boosted FirstGroup's (FGP) overseas performance allowing the company to deliver a 12.8% rise in revenue in the third quarter to 31 December. But strip out the effects of falling sterling and the outcome was basically flat.
FirstGroup operates the Great Western Railway, TransPennine Express and Hull Trains franchises, as well as Tramlink and Heathrow Connect services. It also provides student transport in North America and intercity coach journeys across the US and Canada.
It's in North America where progress is largely evident. First Student, which shuttles American kids to school, is benefitting from higher ticket prices, tight cost control and more school days. This is helping bolster operating margins which have increased gradually throughout the full year to 31 March 2017 to date.
Its famous Greyhound coach services in North America also managed to reverse previous declines to post a 2.5% improvement in like-for-like passenger sales.
This is where investors are focusing, and it's the main reason the share price has advanced 6% to 110.5p in trading on Tuesday.
But there's a mixed performance in the UK. While more passengers are using its rail services, where like-for-like revenue marginally rose 1.1%, network upgrade work has taken its toll on GWR.
FirstGroup's UK bus division is also struggling. This division saw revenues slip 0.6% in the third quarter, although that's a little better than the 1.1% fall in the financial year to date. Traffic jams in towns and cities around the festive holidays also hit business taking shoppers to and from local Christmas markets.
Gert Zonneveld, analyst at stockbroker Canaccord Genuity, remains largely unimpressed. He is disappointed with declining rail earnings, high debt levels and a lack of dividends as UK operations continue to face uncertain economic conditions. With the UK bus business also sluggish, Zonneveld sees little reason to change his current 'hold' recommendation on the stock.
