FirstGroup's rail division gave the company a further boost today after revealing it is on track for growth at the top end of expectations.

A week after the business got the green light to continue running the Great Western franchise until 2019, FirstGroup said strong demand meant that like-for-like rail revenues were likely to be 6.6% higher than a year ago.

Shares rose 4% as the Aberdeen-based company, whose operations cover bus, rail and coach services in the UK and North America, said it expects to meet City targets for the year just ended.

As well as First Great Western, the company has the Transpennine Express rail franchise until 2016 and Hull Trains. However, it recently failed to win a new ten-year ScotRail contract, which it had operated since 2004.

FIrstGroup said like-for-like sales growth at its UK bus division was 2.3%, with revenues benefiting from periodic price increases in line with the market. It added that commercial bus passenger volumes lifted 2.6% on a like-for-like basis over the year.

The firm added that fourth quarter like-for-like revenues at its US intercity Greyhound coaches fell by 5.5% as lower fuel prices made car travel more affordable.

At its US school yellow bus unit, called First Student, it said it was in the second year of it strategy of only bidding for and retaining contracts with a suitable level of return, adding that sales were 1.3% higher in the year.

Chief executive Tim O'Toole said the company continued to make progress with its 'multi-year transformation plans'.

Lewis Sturdy, a dealer at London Capital Group, added: 'The UK bus and rail company has had a bumpy ride of late, however its transformation plan is on track and with a solid fourth quarter the wheels are slowly turning in the right direction.'