FirstGroup shares, the Aberdeen-based bus and train company, rose more than 17 percent on Thursday, after the company reported results that were well above market expectations despite losing a major rail contract.
FirstGroup’s attributable adjusted profit for continuing operations (excluding central costs, interest, and taxes) for the 52-week period ending March 25 more than doubled from £36.2mn to £82.1mn , up from £36.2mn the previous year.
Greyhound’s intercity bus service was the main operation that was discontinued. announced the sale of this operation in October 2021. The revenue from continuing operations increased by 3.6 percent, to £4.76bn.
Last month, it lost its contract with the UK Department for Transport to operate the TransPennine express (TPE) in northern England after experiencing problems with cancellations. The company’s outlook for this year is in line with its expectations, despite the difficult economic and industrial relations climate.
FirstGroup is still the majority shareholder in the Avanti South Western Railway and South Western Railway rail franchising, as well as the operator of Great Western Railway. Lumo offers London-Edinburgh services and Hull Trains runs from London to Hull.
Graham Sutherland said that he was, “clearly disappointed” to have lost [TPE]. “In terms on its impact on business, we are the largest private rail operator in UK.” He continued. Overall, we will deliver rail services in line with our expectations.
Sutherland stated that TPE and Avanti West Coast had both suffered from the withdrawal of their staff’s willingness to work during rest days. Both operators relied on this to operate trains, especially on Sundays.
He said that the open-access operations had enjoyed a “really strong year”, mainly due to leisure demand. Open access operations reached pay agreements with their staff. This has allowed them to continue operating normally during the majority of industrial action which affected other UK train operations over the last year.
FirstGroup, along with other train operators in the UK, is not exposed to the DfT’s risk of fluctuating fares. Instead, it is paid management fees based on performance.
Sutherland stated that Avanti services, which had also been severely disrupted, recovered well.
FirstRail’s adjusted net operating profit increased by 42 percent to £125mn on revenues that increased by 2.4 percent to £3,89bn.
FirstBus’ adjusted operating profit increased by 29 percent to £58.4mn on revenues that grew 14 percent to £903mn. Sutherland stated that the division benefited from a £2 cap on local bus fare in England, and a Scottish Government policy offering free bus travel for anyone under 23.
The company’s pre-tax profit was £129mn for the 52 week period ending March 25, compared to £654mn Pthe year before, with revenue down 15% to £4,76bn.
The company’s share price was up by 20.2p to 138.9p.