Transport firm said improving US results had offset declines in the uncertain UK market
Companies: FirstGroup plc
Shares in FirstGroup fell 6% on Thursday after the FTSE 250 firm reported declining revenues in two of its principal divisions following uncertainty in the UK.
The group said revenue in First Bus and First Rail had fallen 1.1% and 3% respectively with operating margins also being squeezed. However, overall revenues rose 8.3% following improved margins in the US and good results in its First Student division.
Pre-tax profit jumped 34.4% to £153m while its adj pre-tax profit was £207m, 5% ahead of consensus forecasts.
The Company has previously warned that the UK's decision to Brexit could cause uncertainty, but this has been offset by its US businesses which have seen improved trading across the Atlantic.
There is expected to be a similar pattern this year, with opportunities in the US but continued uncertainty in the UK. Despite poor results in the UK, the Group has continued to bid on train services like South West, and the East Midlands franchise.
CEO Tim O'Toole said the Company was encouraged by the financial results, with its largest division First Student delivering significant margin improvement despite driver recruitment challenges.
“In the year we have maintained our consistent and disciplined approach to bidding for future business throughout the Group, with the recent award of the South Western rail franchise being a good example of our focus on the service quality improvements our customers and communities tell us they want. Meanwhile, we continue to increase our use of technology across the Group to make it easier for passengers to use our services, and to deepen our understanding of our customers’ evolving needs."
Looking ahead to the rest of the year, he said the firm was making progress towards its objectives despite the mixed trading environment.
