First Bus losses offset growth
Group revenue in the first quarter of FirstGroup’s 2016/17 trading year decreased by 1.4% in constant currency. Its revenue growth in First Student, First Transit and First Rail was offset by decreases in First Bus and Greyhound. During the period, First Bus’ like-for-like revenue fell 1.4%, with passenger volumes continuing to be affected by lower high street retail footfall and congestion impairing services in several of its markets. It continues to take action to offset the challenging market backdrop by merging or closing a number of depots and making other cost efficiencies. It expects to deliver margin progression during the current year from the benefits of past cost saving actions, additional cost and operational efficiency initiatives and reduced fuel costs.
The company says it is too soon to judge the overall effect of the EU referendum decision on the Group. Over two thirds of Group adjusted operating profit was generated in North America in the last financial year and it believes the weakening of sterling since the referendum outcome would, if maintained, result in translation benefits from its US Dollar denominated businesses, albeit partly mitigated by some US Dollar denominated costs incurred in the UK divisions (principally for fuel), as well as some US Dollar interest and tax costs.
FirstGroup Chief Executive, Tim O’Toole, said, ‘Our trading performance as outlined at the recent full year results in June has continued during the first quarter, and the Group expects to make strong progress in the current year despite a challenging and uncertain 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 prior year. Overall, we expect to deliver a significant improvement in our profile of sustainable returns and cash generation going forward.’