FirstGroup sees improving bus units offsetting shrinking rail arm

LONDON (Reuters) - British transport company FirstGroup (FGP.L) reported a 13 percent rise in annual profit and guided that improvements in its U.S and UK bus services would "largely offset" the impact of its shrinking UK rail business.

FirstGroup's UK rail business suffered a heavy blow last year when it failed to win new contracts to keep running services on First ScotRail and First Capital Connect, and also lost out on bids for new contracts.

The company posted an adjusted operating profit of 303.6 million pounds ($468 million) for the 12 months ended March 31, in line with analyst forecasts and up from the 268 million pounds it made in the same period last year.

For the coming year, FirstGroup said there would be a "substantially lower contribution" from its UK rail business but that improvements in First Student, which runs yellow school buses in the U.S, and its regional UK bus businesses would almost make up for it.

Analysts expect the company to post operating profit of 298 million pounds for the current financial year, according to a Thomson Reuters consensus forecast.

FirstGroup also said group Finance Director Chris Surch had quit the company for personal reasons and the company had started the search for his replacement. His notice period runs until Jan. 8, the company added. ($1 = 0.6485 pounds)

(Reporting by Sarah Young; Editing by Neil Maidment)