FirstGroup hails growth in revenues at UK bus division
Firm underlines scope for more progress as its turnaround plan continues
FIRSTGROUP has hailed continuing growth in revenues in its UK bus business and underlined hopes that growth will help offset the impact of losing key train franchises including ScotRail.
The Aberdeen-based company, which is undergoing a turnaround plan, said revenues in its UK bus business since April 1 were up by 1.4 per cent on the same period of last year on a like-for-like basis.
It said that commercial passenger revenue in the UK bus division, which includes major operations in Glasgow, continued to grow at an overall year-on-year rate of more than two per cent.
It noted this growth had been offset partially by a reduction in concessionary travel revenue.
A FirstGroup spokesman said things were “going pretty well” in the Glasgow bus business, highlighting the company’s opening of the major Caledonia depot on the south side of the city.
FirstGroup underlined scope for further progress from its “transformation programme” and its medium-term aim of achieving double-digit-percentage profit margins in its UK bus business.
The company declared it had made “good progress” in its contract-pricing strategy in its North American school bus business, First Student. FirstGroup added that it was achieving average price increases of more than five per cent, and a contract retention rate in excess of 80 per cent.
However, it also highlighted the continuing impact of lower oil prices on its Greyhound bus business in North America.
FirstGroup said that revenues in the Greyhound business in the first quarter were down by 5.7 per cent on the same period of last year on a like-for-like basis, with lower prices at the pump making car travel cheaper for motorists.
The company also noted reduced demand for shuttle services operated by its First Transit division in the Canadian oil sands region.
Tim O’Toole, chief executive of FirstGroup, said: “Overall trading for the group during the first quarter was in line with our expectations, and we remain focused on delivering further progress from our transformation plans.
“With three-quarters of the current bid season concluded, First Student continues to achieve slightly higher average price increases than the prior year. UK Bus delivered further growth, with concessionary revenues moderating continued commercial passenger revenue growth, and we continue to take action to improve our cost-efficiency on a market-bymarket basis.”
He added: “We anticipate strong progress for the current year in our non-rail businesses, mainly from the First Student and UK Bus turnarounds, to largely offset the reduced size of our UK rail franchise portfolio compared with the prior year.
“We are on track to meet our financial objectives through our multi-year transformation plans, and thereby return to a position of sustainable strong cashflow and value creation.”
FirstGroup said that its overall trading in the first quarter had been in line with expectations.
The company said that, as in previous years, its results in the current year would be weighted significantly to the second half of its financial year because of the impact of the timing of school summer holidays on the First Student business.
FirstGroup added that this effect would be magnified by the reduced contribution from its UK rail business in the first half, compared with the same period of the prior financial year, following the end of the First Capital Connect and First ScotRail franchises.
Dutch company Abellio took over the running of ScotRail on April 1, after FirstGroup lost out in the bid battle for this franchise.
FirstGroup continues to run the TransPennine Express and Great Western rail franchises.
Shares in FirstGroup edged down by 0.6p to 118.5p.