Firstgroup shares rise as school bus unit delivers

SHARES in Firstgroup rose more than four per cent yesterday, as the Aberdeen-based company flagged its confidence in delivering full-year profit growth in its North American school bus business in spite of driver shortages.

Firstgroup reported a 1.3 per cent year-on-year rise in passenger revenue in its UK bus business for the period from September to January on a like-for-like basis, even though passenger volumes fell by 1.9%. It cited “subdued high street footfall over the Christmas period” and restructuring of its network as factors affecting passenger numbers.

In the same period, Firstgroup’s UK rail passenger revenues were up 4.2% on a like-for-like basis on a year earlier, representing a slowdown in growth. Firstgroup said this slowdown reflected “significant infrastructure challenges which resulted in disappointing operating performance for passengers towards the end of 2018”.

Firstgroup’s North American Greyhound and First Transit businesses recorded respective yearon-year revenue increases of 0.2% and 2.3% in the September to January period.

Revenues in the First Student school bus business in North America were, in the period, up 6.2% on a year earlier. The company said First Student was benefiting from price rises and higher contract retention rates in last summer’s bid season.

Firstgroup added: “Notwithstanding ongoing driver shortages from the strong US employment market, our solid performance since the start of the school year, together with cost-efficiency actions, underpins our confidence in delivering profit growth for the full year.”

The company, which runs the Transpennine Express and Great Western Railway franchises and operates South Western Railway in a joint venture with MTR Corporation, said its revenues so far in its financial year to March 31 were up by 13.7% on a year earlier. Its shares closed 4.3 per cent or 3.95p higher at 95.45p.