FirstGroup shares hit by pandemic ‘uncertainty’

Shares of Aberdeen-based bus and rail giant FirstGroup fell about 6% on Thursday after it warned about the “uncertainty around the pace of recovery in light of the evolving circumstances of the pandemic.”

That’s despite FirstGroup reporting first-half results that spoke of a “transformed business having exited North American operations, with further value to be realised including from First Transit earnout and Greyhound property disposals and other receipts, in addition to the £500m recently returned to shareholders.”

FirstGroup said first-half revenue from continuing operations increased about 4% to £2.139 billion in the 26 weeks to September 25 “principally reflecting improving First Bus passenger revenues broadly offset by lower receipts from government grants and other funding mechanisms, while First Rail revenue was broadly flat compared with the prior period.”

Statutory operating profit from continuing operations rose to £52.2 million from £37.8 million.

On current trading and outlook, FirstGroup said the First Bus passenger volume recovery was ongoing with 71% of equivalent 2019 levels achieved on average in recent weeks, which “represents a slowdown in the rate of improvement, with pandemic-related restrictions varying by UK region.”

The group said First Rail’s four management fee-based operations are delivering performance metrics in line with management expectations.

FirstGroup, which has 30,000 employees, is the second largest regional bus operator in the UK, serving two-thirds of the UK’s 15 largest conurbations with 5,000 buses.

First Rail is the UK’s largest rail operator with four management fee-based train operating companies — Avanti, GWR, SWR, TPE — and two “open access routes” in Hull Trains and Lumo, its new East Coast service launched in October 2021.

FirstGroup executive chairman David Martin said: “We have delivered on our commitment to unlock value.

“By divesting our North American operations, we have strengthened our financial position, refocused on our market-leading public transport operations in the UK, and returned £500m in value to our shareholders.

“With a well-capitalised balance sheet and an operating model that supports our intention to begin regular dividends to shareholders within the next 12 months, FirstGroup is now a more resilient and flexible business.

“I am confident that we are well-placed to create long term, sustainable value from the opportunities ahead, underpinned by the UK policy backdrop which places public transport at the centre of the economic recovery, decarbonisation and levelling up agendas.”