TRANSPORT group Stagecoach yesterday welcomed the progress made by its London bus operation, but warned the growth would not continue indefinitely.

The bus and rail group said a good performance by South West Trains also contributed to a 13 per cent rise in half-year profits, ahead of analysts' expectations.

The company, which has significant operations in the North-East, said its profits had been achieved despite the impact of significantly higher fuel prices.

The fuel price rise was managed by Stagecoach by raising fares and contract prices, as well as buying fuel in advance.

Underlying profits before goodwill and exceptionals rose to £69.2m in the six months to October 31. Trading remained in line with the company's expectations.

Contract wins boosted the London bus business, with turnover increasing by 22.1 per cent against the same period last year.

But Stagecoach said: "While we are encouraged by the tremendous rate of growth in London, we do not expect this growth rate to continue indefinitely."

The company operates about 7,000 buses in nearly 100 towns and cities in the UK, with significant operations in Newcastle, Manchester, Oxford and Cambridge, as well as in London.