First trading as expected
In an interim management statement on trading for the three months ended 31 December 2013, FirstGroup reports its overall performance has been in line with management’s expectations, with good developments made in four divisions offset by slower progress in First Student. In its UK Bus division, like-for-like passenger revenue increased 2% during the period, underpinned by good passenger volume growth, continuing the encouraging trends achieved in the first half of the financial year. It continues to see positive results from the operations furthest along the transformation programme, despite the challenging economic conditions that prevail in a number of its local markets.
First’s management claim the company is on track with plans to return the division to double digit margins in the medium term. It aims to achieve this through further cost optimisation from more disciplined operations; market-by-market improvements to its network designs and fares structures to drive improved volume growth; and further investment in its bus fleets and technology to improve customer experience. It recently confirmed a £70m investment in 425 new buses, helping to improve reliability, reduce fuel and maintenance costs as well as significantly enhance the quality of its service offering to customers.
In First’s Greyhound operation in the US, the focus on cost management has ensured margin performance remains on course. The expansion of its Greyhound Express services continues. Its UK Rail operations continue to deliver solid passenger revenue and volume growth across all its franchises.
Chief Executive, Tim O’Toole, said, ‘I am pleased to report that overall trading in the period is in line with our expectations, with a good performance in four of our divisions offset by slower progress in First Student. While there remain a number of short term challenges to overcome, the programmes are in place that will enable the Group to benefit from its market leading positions. The slowing of our margin progression in First Student during the period was disappointing, however we remain confident in achieving our medium term objectives for the division as we refresh the management team and drive further cost efficiencies and improve returns across the business. As we work through the current bidding season, which is just commencing, our focus remains on those markets where our superior offering is valued. The performance of the other divisions in the period was encouraging. In UK Bus, we are pleased with the tangible results we are seeing from our comprehensive transformation plans, and although challenging economic conditions continue in some of our local markets, our confidence continues to grow.’
‘I am confident we are on the right track to increasing the resilience of the Group and improving returns and growth prospects for the benefit of all our stakeholders. I am very pleased to welcome John McFarlane to the Board as Chairman. He joins at an important time for the Group and his extensive international experience and track record of value creation will be invaluable as we work to deliver sustainable long term value for shareholders.’