First bus business sale possible
FirstGroup has announced it is planning to potentially sell its First Bus business in the UK. It is looking for ‘structural alternatives’ to separate the division from the Group.
The operator is also selling its iconic Greyhound business in the US. FirstGroup’s future emphasis will be on its First Student and First Transit businesses, its core North American contracting businesses. It believes these have the greatest potential to generate sustainable value and growth over time. First Student and First Transit together generated 60% of the Group’s operating profits in 2019.
The news comes as the operator published its trading figures for the 12 months to March 2019. The results showed statutory loss before tax of £97.9m. This follows from 2018’s annual financial results, where it reported a loss before tax of £326.9m. FirstGroup’s previous Chief Executive, Tim O’Toole, immediately stood down from his position following the announcement of last year’s results.
First Bus achieved revenue of £876.1m in the 12 months to March 2019, down £3.3m from the same time last year (2018: £879.4m).
According to press reports, FirstGroup is under pressure from one of its investors to boost returns to shareholders in the business.
FirstGroup Chief Executive, Matthew Gregory, said: “Since becoming Chief Executive in November 2018, I have been focused on setting the Group on a clear path to enhance value. By executing the portfolio rationalisation plans we are announcing today, our future emphasis will be on First Student and First Transit, our core contracting businesses in North America. We see significant potential to generate long term, sustainable value and growth from the solid platforms these businesses provide in the North American mobility services sector. We are intent on executing this strategy at pace, having full regard to the regulatory and stakeholder procedures and approvals that will be required.
“In parallel with our portfolio rationalisation plans we will continue to drive forward the clear strategies now established in each of our divisions to ensure they deliver further progress and growth in existing and adjacent markets, underpinned by our plans to enhance our cost base further.
“Our plans will create a more focused portfolio, with leading positions in our core North American contracting markets, and is the most appropriate means for us to deliver enhanced sustainable value for all our stakeholders.”
At the time of writing, no buyers for either the UK Bus business or Greyhound have been confirmed.