British transport company FirstGroup (FGP.L) reported a 23 percent jump in annual profit on Thursday thanks to an improved performance of its U.S. operations, but gave a cautious trading outlook and failed to reinstate its dividend.
Shares in the company fell as much as 10 percent, the top loser on the FTSE mid-cap index .FTMC.
The company, which operates trains including the Great Western Railway in Britain and yellow school buses in the United States, warned of mixed trading conditions in the year ahead, marked by steady progress in North America but economic uncertainty in Britain.
FirstGroup did not recommend a dividend payout for the year ended March 31 and said it was still assessing an appropriate time to resume dividends.
Pretax profit for the year ended March 31 rose 23 percent to 207 million pounds, the company said. Revenue rose 8.3 percent to 5.65 billion pounds, aided by a stronger U.S. dollar, in which FirstGroup generates a chunk of its revenue.
On a constant currency basis, revenue fell 0.5 percent.
FirstGroup is grappling with an underperforming rail business, hurt by slowing growth in passenger volumes, which the company has blamed on economic uncertainty and people opting to drive more frequently due to lower fuel prices.
"It's been a long journey for FirstGroup, but it finally looks like some progress is being made, in parts of the business at least," Hargreaves Lansdown analyst George Salmon said.
"Nonetheless, cost inflation is hanging over the group and there is still no sign of a resumption in dividend payments. Some analysts had been, perhaps wishfully, pencilling in a payout for this year."
The company said it expects margins to decline at its First Rail business and remains cautious on passenger growth rates given current industry conditions.
Revenue for its rail business, which operates the TransPennine Express and Great Western Railway companies, fell 3 percent to 1.27 billion pounds for the year.
The company's rail business is due to operate the Southern Western franchise - trains to London from cities such as Bristol and Exeter - along with its partner Hong Kong's MTR (0066.HK) from August.
FirstGroup shares were down 5.6 percent at 141.3 pence by 0956 GMT.
(Reporting by Rahul B and Tenzin Pema in Bengaluru; Additional reporting by Kate Holton in London; Editing by Jason Neely and Susan Fenton)