FirstGroup trading ahead of expectations

Operator makes £2-3m cost saving with pension funds termination

In a post close update on trading for the 27 weeks to 30 September 2023, FirstGroup reports trading slightly ahead of expectations during the first six months of FY 2024. It says this is due to strong passenger volumes and productivity improvements resulting from the management actions it has taken to transform the business.

In September, First Bus concluded a period of consultation with regards to its two Local Government Pension Funds and will subsequently terminate its participation in these funds on 31 October 2023, with affected employees enrolled into the First Bus Retirement Savings Plan. As a result of the termination, the Group anticipates a £2-3m annualised cost saving for the First Bus division, with an estimated saving of approximately £1m in 2024. The settlement of the pension obligations, to be determined on the termination date, is expected to result in an estimated Group net cash inflow of up to £15m after costs.

Due to the factors referenced above, the Group anticipates that its FY 2024 Group adjusted operating profit and Group adjusted attributable profit will be ahead of the Board’s previous expectations by circa £14-20m and around £7-10m respectively.

The Group expects to end the financial year in an adjusted net cash position of £20-30m, assuming the completion of the current £115m share buyback programme and before deployment of potential growth capital.

“In First Bus, we are delivering sustainable revenue growth as passenger volumes increase” – Graham Sutherland, FirstGroup Chief Executive Officer

Graham Sutherland, FirstGroup Chief Executive Officer, said: “Over the last few months, we have successfully built on the strong financial performance we reported at our full year results in June. Our updated outlook for FY 2024 reflects a strong performance in our First Rail division, which is testament to the hard work and capabilities of our teams. In First Bus, we are delivering sustainable revenue growth as passenger volumes increase and we continue to benefit from the actions we have taken to transform the business.”

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