FirstGroup shares slide as £300m loss is re­vealed

Western Daily Press - - Business - HOLLY WIL­LIAMS busi­ness@west­erndai­ly­press.co.uk

TRANS­PORT giant FirstGroup saw shares tum­ble af­ter flag­ging doubts over its fu­ture amid the coron­avirus pan­demic as pas­sen­ger numbers plunged and it slumped to a £300 mil­lion loss.

Shares in the bus and rail firm - which runs train fran­chises in­clud­ing Great Western Rail­way, South Western Rail­way and Avanti West Coast - plum­meted as much as 18 per cent on Wed­nes­day af­ter it re­vealed a “ma­te­rial un­cer­tainty” over its abil­ity to con­tinue as a go­ing con­cern.

It saw pre-tax losses widen to £299.6 mil­lion for the year to March 31 from losses of £97.9 mil­lion the pre­vi­ous year af­ter book­ing a raft of charges - in­clud­ing a £21.5 mil­lion hit for the Covid-19 cri­sis. The group, which is also the biggest op­er­a­tor of bus ser­vices in the West, said pas­sen­ger numbers across its UK and in­ter­na­tional ser­vices plum­meted by around 90 per cent in March as coun­tries were placed into lock­downs.

It said on­go­ing guid­ance to limit travel and so­cial dis­tanc­ing mea­sures will con­tinue to have a “sig­nif­i­cant im­pact on our ser­vice ca­pac­ity and financial per­for­mance”.

The up­date said that prior to the pan­demic its GWR di­vi­sion was per­form­ing strongly.

The firm has tapped into the UK’s Covid Cor­po­rate Fi­nanc­ing Fa­cil­ity for £300 mil­lion, with sup­port also ex­pected in the US for its Grey­hound coach arm.

It warned over the risks sur­round­ing state sup­port schemes and a re­cov­ery in de­mand among cau­tious pas­sen­gers, but stressed it had “ad­e­quate” re­sources to carry on op­er­at­ing for the next 12 months.

Chief ex­ec­u­tive Matthew Gre­gory said: “We do not yet know the rate and ex­tent of de­mand re­cov­ery, nor how long re­stric­tions or so­cial dis­tanc­ing will be in place.

“Nor do we know how gov­ern­ment and cus­tomer sup­port might ta­per, al­though it’s clear that gov­ern­ments and cus­tomers un­der­stand the key role that our ser­vices play.”

He added: “The im­por­tance of pub­lic trans­port to so­ci­ety has never been more clearly demon­strated, and we will con­tinue to take all nec­es­sary mea­sures to en­able the group to emerge from this un­prece­dented sit­u­a­tion in a ro­bust po­si­tion.”

Re­sults showed First Group’s bot­tom line was also hit by a £186.9 mil­lion im­pair­ment charge for its Grey­hound coach busi­ness in the US, which it has been strug­gling to sell.

The firm has since put its en­tire North Amer­i­can busi­ness up for sale - in­clud­ing the First Stu­dent and First Tran­sit busi­nesses - fol­low­ing pres­sure from an ac­tivist in­vestor.

But it ad­mit­ted that the coron­avirus cri­sis has slowed the sale process.

Trans­port ex­pert Ger­ald Khoo, at Liberum, said the full-year re­sults showed a big­ger-than- ex­pected im­pact from the pan­demic in the fi­nal few weeks of trad­ing.

He added: “Sup­port from gov­ern­ments and cus­tomers has been cru­cial to al­low­ing the group to re­main cash-gen­er­a­tive in the first quar­ter.

“We ex­pect this sup­port to con­tinue, but any wa­ver­ing of such sup­port is a key risk.”

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