The Courier & Advertiser (Fife Edition)
FirstGroup shares fall despite hike in profits
Company apologises for tram derailment in Croydon that cost seven lives
Shares in FirstGroup had a bumpy ride yesterday despite the bus and train operator reporting a 23% hike in annual profits.
Preliminary results for the north east based group show it delivered a 8.3% uplift in revenues on an adjusted basis to £5.65 billion in the year to March 31, while pre-tax profits were 23% ahead of the year previous at £207 million.
On a statutory basis, pre-tax profits were 34.4% up on 2016 at £152.6m.
However, shares dropped by 10% at one stage before rallying as investors were left cold by a cautious outlook and the group’s decision to not recommend a dividend payment for the year gone.
“In the year ahead, the group faces a mixed trading environment with opportunities for steady progress in the North American divisions but continued economic uncertainty in the UK,” chief executive Tim O’Toole said.
“We expect to make further progress from the Road divisions, with First Rail’s margin reducing, and to continue to generate free cash after disciplined investment to support our customers’ and communities’ needs across the group.”
In its results statement, First Group said it had achieved the “financial ambitions” it had set out for the year, including delivering a significant increase in net cash generation.
“We are encouraged by this year’s improved financial results, with our largest division First Student delivering a significant margin improvement despite continued driver recruitment challenges, while our First Bus and First Rail operations have faced more challenging market conditions this year,” Mr O’Toole said.
“Through rigorous focus on sustainable operational and capital efficiencies, we were also able to generate substantially improved net cash inflow of £147m.
“In the year we have maintained our consistent and disciplined approach to bidding for future business throughout the group, with the recent award of the South Western rail franchise being a good example of our focus on the service quality improvements our customers and communities tell us they want.”
The Aberdeen-based group also took the opportunity to address the tram tragedy at Croydon on November 6 last year in which seven people were killed.
The tram was operated by FirstGroup on behalf of Transport for London.
The firm said it was providing full support to the various inquiries being carried out into the crash.
Mr O’Toole said: “We are profoundly sorry that such an incident could take place aboard a service we operate. Our thoughts remain with the families and friends grieving for people who lost their lives, and those who were injured and affected by this terrible event.”
Shares in FirstGroup were down 5% or 7.5p to 142.3p last night.