* Expected weakness at East Midlands franchise hit H1
* East Midlands seen returning to profitability in H2
* Current trading remains in line with views
* H1 pretax profit down 18 pct, sales up 14 pct
* Shares up 2.2 percent
By Adveith Nair
LONDON, Dec 7 British transport group
Stagecoach should have a stronger second half as its
East Midlands rail unit returns to profitability, after a loss
at the franchise weighed on first-half profit.
The bus and rail operator said on Wednesday its British rail
business swung to a first-half loss following weak trading at
the East Midlands franchise, leading to an 18 percent drop in
Pretax profit in the six months to October fell to 88.7
million pounds ($138 million), compared with a forecast for 96
million in a Thomson Reuters I/B/E/S forecast and in line with a
poll supplied by the company.
UK Rail swung to an operating loss of 6.9 million pounds
from a profit of 22.9 million a year ago.
"This is old news and should not impact sentiment," said
analysts at Deutsche Bank. "The loss has been driven by rising
DfT premiums at East Midlands but the franchise is now in
revenue support and we expect small profits going forwards."
"The focus ought to be on excellent regional UK Bus
performance where commercial revenues are up 6.5 percent."
Shares in the Scotland-based company were up 2.2 percent at
254 pence at 0850 GMT.