First half revenue up 5.1% to £2.56bn at FirstGroup

Aberdeen-based bus and rail giant FirstGroup said its revenue rose 5.1% to £2.56 billion in the six months to September 30 but adjusted profit before tax fell 2.2% to £21.9 million as “encouraging performances” by its North American businesses were partially offset by “more challenging trading conditions” for its UK operations.

FirstGroup also said it is “providing full support” to the ongoing investigation into last week’s tragic tram derailment in Croydon involving the Tramlink network FirstGroup operates on behalf of Transport for London.

“The thoughts of everyone at FirstGroup are with those affected, their families, friends and colleagues,” said FirstGroup. “We are providing full support to the ongoing investigation.”

FirstGroup chief executive Tim O’Toole said: “Our overall trading performance as outlined at the start of the financial year continued during the first half, with encouraging performances by our North American business partially offset by tough trading conditions for our UK bus and rail operations.

“In the second half we will benefit from our normal seasonal bias as well as our ongoing focus on executing our strategy.

“We continue to expect good progress for the group in the current year, recognising we will likely benefit from currency tailwinds from our substantial North American operations but will also face uncertain economic conditions in the UK for the foreseeable future.

“Our cash performance in the first half affirms our confidence in generating significantly increased cash flow for the full year.”

FirstGroup shares rose about 2.6%.

O’Toole said the company’s First Student business concluded this year’s bid season with higher average price increases than in the prior year, although acute driver shortages remained a significant ongoing challenge for the industry.

“Our margin progress in the first half and a successful school year start up due to improved training and planning at our locations means we are well positioned to deliver our expected margin progress to at least 9% for this financial year,” said O’Toole.

In its First Transit business, the company suffered the impact of reduced demand for its shuttle services in the Canadian oil sands, but said it “made progress in a number of areas that will be important for continuing the division’s track record of profitable growth over the longer term, with contract awards in our existing markets and new business wins in US commuter rail and internationally in the period.”

Its Greyhound bus business continued to face demand challenges from lower fuel prices compared with the prior period, and like-for-like revenues fell by 3.9% in the first half, but O’Toole said it “delivered a relatively resilient margin performance …”

FirstGroup’s North American businesses made revenues of $2.12 billion and operating profit of $101.9 million in the first half.

FirstGroup said its UK-based businesses experienced ongoing challenging trading conditions in the period, with recent disappointing volume trends in both bus and rail continuing throughout the first half.

First Bus like-for-like passenger revenue improved modestly in the second quarter compared with the first but was still 1.3% lower overall compared with the first half of last year.

First Rail like-for-like passenger revenues increased by 0.7% in the first half, with the slowdown in growth seen across the industry exacerbated by the sheer scale of the infrastructure upgrade activity on the Great Western Railway (GWR) franchise in particular.

FirstGroup’s £2.56 billion total first half revenue included £719.5 million revenue from FirstStudent, £595.8 million from FirstRail, £482.5 million from FirstTransit, £426.1 million from FirstBus and £333.4 million from Greyhound.