First Group posts 14% rise in revenue

First Group posts 14% rise in revenue

UK and Europe largest bus transport company, FirstGroup plc said its revenue for the year-end September 2018 rose to 13.7%.

FirstGroup plc said in a statement that revenue growth +13.7% year to date. Group revenue in constant currency and excluding the SWR rail franchise +5.5% YTD. The company said its

Road divisions’ revenue in constant currency1 +1.9% YTD .

Commenting on today’s announcement, FirstGroup Chief Executive Matthew Gregory said:

“Our overall trading performance in the period was in line with our expectations; in particular last summer’s strong bid season in First Student, our largest division, together with further momentum in First Bus, support our unchanged outlook for the full year. Recognising that overall conditions in our markets remain uncertain, and poor weather retains the potential to affect our performance, we are getting on with delivering plans that will improve services for customers and unlock the inherent value within the Group.”

Divisional updates

In First Student, we are benefiting from the price increases and higher contract retention rates we achieved in last summer’s bid season. Notwithstanding ongoing driver shortages from the strong US employment market, our solid performance since the start of the school year, together with cost efficiency actions, underpin our confidence in delivering profit growth for the full year.

First Transit’s performance remains broadly in line with the prior year, with contract awards and organic growth offsetting the end of a number of relatively large contracts, including the previously noted high margin business in the Canadian oil sands region. Our productivity and cost efficiency improvements continue to offset the persistently challenging cost environment for drivers in the US.

Greyhound continues to face a difficult trading environment in certain of its markets. We have been implementing the actions of the plan we set out in November, following our review of Greyhound’s business and prospects, and are beginning to see early signs of improvement from the commercial and operational changes we have made across the network. In Canada, our withdrawal of service in significant parts of the country from October 2018 has proceeded to plan, and we continue to take action to unlock value, such as the sale of a facility in Chicago for $38m at the end of January 2019.

First Bus like-for-like passenger revenue growth was +1.3% in the period with higher revenue per mile from our commercial actions. This more than offset a like-for-like passenger volume decrease of (1.9)% in the period, driven by subdued high street footfall over the Christmas period and network restructuring. Our industry-leading rollout of contactless ticketing and other actions are enhancing convenience for our customers and supporting greater efficiency. We continue to improve our margins by modernising our operating procedures and work practices, whilst taking the necessary actions to ensure our cost base is appropriate. We continue to prioritise investment in those markets where stakeholders support our ambitions to deliver thriving and sustainable bus services. In the period for example we announced 75 new ultra-low emission vehicles for Glasgow in 2019, and have taken delivery of more than 100 new ultra-low emission buses in Leeds in the last twelve months, part of our £71 million investment in the partnership with the city. Today we announced the sale of Queens Road, one of our bus depots in Manchester, to the Go-Ahead Group for £11.2m.

First Rail’s like-for-like passenger revenue growth slowed to +4.2% in the period, principally reflecting significant infrastructure challenges which resulted in disappointing operating performance for passengers towards the end of 2018. We are working constructively with our industry partners to improve our operating performance and are encouraged with the improvements made since the start of 2019. GWR continues to roll out the Hitachi Intercity Express Train fleet and to manage customer journeys around the substantial infrastructure upgrade work being undertaken by Network Rail. In December TPE made several amendments to the timetable that have significantly enhanced the reliability of services. In addition to the reduced services caused by strike action, the performance of SWR has been affected by several operating incidents in the period that caused significant disruption. As previously noted, in accordance with all our current franchise agreements, we are engaged in discussions with the Department for Transport to work through potential commercial and contractual amendments, a process that remains ongoing.

January 2019 bond

The £250 million 6.125% coupon bond due January 2019 was recently refinanced from cash on hand and revolving bank facilities as planned. As previously indicated this will not have a significant effect on the Group’s overall interest costs going forward as the bond had been swapped to a floating rate. The Group’s next major refinancing is the £350 million 8.75% bond due April 2021.