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UK transport firm FirstGroup confident in recovery despite rail setback

LONDON, Nov 5 (Reuters) - British transport company FirstGroup (LSE: FGP.L - news) said it was confident that a turnaround plan was working and that it was on course to meet full-year expectations, even after it lost out on a series of rail contracts in the UK.

FirstGroup has been in recovery mode since mid-2013 when it scrapped its final dividend and had to raise 615 million pounds ($976.87 million) in a rights issue to avoid its credit rating being cut to "junk".

The company said on Wednesday that its first-half performance - it posted a 2.4 percent rise in operating profit to 104 million pounds ($165 million) for the six months to Sept. 30 - put it on track to meet its forecast for the full-year.

"Trading during the first half was in line with our expectations for the group and our transformation programmes continue to make progress as planned," Chief Executive Tim O'Toole said.

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Shares (Berlin: DI6.BE - news) in the company gained 4 percent to 120 pence at 1023 GMT.

The company, an owner of Greyhound buses in the United States and operator of the Great Western rail line in Britain, has suffered a series of setbacks in its rail business this year, bidding for four contracts without winning one.

It remains in the running for the East Coast route, the award of which is due this month.

"Delivering on full-year expectations would give clear evidence of progress in the turnaround programme, while the East Coast rail franchise competition could be an additional short-term catalyst," Liberum analyst Gerald Khoo said in a note. (1 US dollar = 0.6296 British pound) (Reporting by Sarah Young, editing by Louise Heavens)