FirstGroup’s first quarter
Overall trading for FirstGroup is in line with management expectations, according to the company’s latest figures for the first quarter of its 2015/16 financial year. During the period covered, like-for-like revenue in the operator’s UK Bus business increased by 1.4%, with commercial passenger revenue continuing to grow at more than 2%, partially offset by a decrease in concessionary revenue.
As part of its transformation programme, First is making changes to its local commercial proposition to stimulate growth. For example, in the first quarter it launched a rebranded service in Leeds with more frequent services, which will shortly be followed by the roll out of multi-operator smart ticketing in Leicester and Bristol. It has invested in 385 ‘low carbon certified’ buses worth £77.7m, set for delivery in the current year. The company aims to promote and build strong partnerships with local authorities. Another key element of its transformation is cost efficiency, tailoring its actions to local market conditions. This includes a number of changes to its depot portfolio, which is expected to accelerate the achievement of its medium term target of double digit margins.
Chief Executive, Tim O’Toole, said, ‘UK Bus delivered further growth with concessionary revenues moderating continued commercial passenger revenue growth, and we continue to take action to improve our cost efficiency on a market-by-market basis. We anticipate strong progress for the current year in our non-rail businesses, mainly from the First Student and UK Bus turnarounds, to largely offset the reduced size of our UK Rail franchise portfolio compared with the prior year. We are on track to meet our financial objectives through our multi-year transformation plans, and thereby return to a position of sustainable strong cash flow and value creation.’