FirstGroup profit £113.5m on £5.2bn revenue

FirstGroup chief executive Tim O’Toole

Shares of Aberdeen-based bus and rail gaint FirstGroup rose at least 9% after it said its statutory profit before tax rose 7.3% to £113.5 million despite revenue falling 13.8% to £5.2 billion due to a smaller rail franchise portfolio in the year to March 31.

FirstGroup said its medium term future in the UK rail industry had been secured through its Great Western Railway (GWR) and TransPennine Express (TPE) contract awards, as well as through “open access operations.”

Last month, FirstGroup was granted approval by the Office of Rail and Road (ORR) to launch “open access” rail services between London, north-east England and Edinburgh offering an average fare of less than £25.

FirstGroup said it transported 2.2 billion passengers last year in the UK and North America.

In North America, the firm’s First Student division is the largest provider of student transport with 47,000 yellow school buses and its Greyhound division is the only nationwide operator of scheduled intercity coach services.

In the UK, FirstGroup is one of the largest bus operators with a fleet of 6,200 buses.

In UK rail, FirstGroup carried 140 million passengers last year.

“Overall we have made encouraging progress this year toward a profile of more consistent financial returns for the group,” said First Group chief executive Tim O’Toole.

“As we indicated at the start of the year, a smaller rail franchise portfolio and fewer operating days in our school bus business were factors that would make delivering headline growth this year challenging.

“However, by being flexible with our plans we have delivered a comparable adjusted operating profit to last year and a net cash inflow ahead of our expectations.

“The group expects to make strong progress in the year ahead despite a challenging trading environment in several of our markets.

“This will come from our continued focus on disciplined contract bidding and rigorous cost efficiency programmes, as well as lower fuel costs and more First Student operating days compared with the year just ended.

“Following several years of reinvestment we expect to deliver a significant increase in net cash generation.

“Overall, we expect the considerable efforts of our people in recent years to be reflected in a significant improvement in our profile of sustainable returns and cash generation going forward.”