Contract Losses Send FirstGroup Off Track

A series of lost rail contracts has dented FirstGroup (LSE: FGP.L - news) 's revenue, although the transport company enjoyed a leap in profits as it pins its hopes on other parts of the business.

Overall revenue was down by 9.9% to £6.05bn for the year to 31 March, while rail income alone fell by 23% to £2.2bn.

Profits in the same period soared by 81% to £105.8m, sending its shares 6% higher by mid-morning.

The last two years have been especially troublesome for FirstGroup's rail operations.

The company lost out on five consecutive rail bids last year, including the ScotRail franchise which it forfeited to the Dutch company Abellio. FirstGroup had run this franchise for a decade.

Despite the setbacks, the company was keen to highlight the renewal of major contracts - and it also reported its UK bus passenger numbers grew 1.1% as the area benefited from falling fuel prices.

FirstGroup boss Tim O'Toole said: "We were awarded a contract to operate First Great Western for up to four and a half more years, and will continue to work closely with the Department for Transport and Network Rail to deliver the £7.5bn Great Western Mainline modernisation programme to at least March 2019."

He added: "We have also signed an agreement to run First TransPennine Express through to 1 April 2016, and recently submitted our bid to operate the franchise beyond that date."

Last week, the Department for Transport announced the contenders for the next East Anglia rail franchise with both FirstGroup and Abellio in contention.

National Express (LSE: NEX.L - news) complete the trio competing to run the London to Norwich route. A decision is expected in October.