East Anglia: FirstGroup bus division sees profits fall despite improvement in passenger numbers
Tim O'Toole, chief executive of FirstGroup - Credit: Archant
Transport operator FirstGroup today reported a fall in half-year profits from its bus division despite the business achieving its first increase in passenger numbers since 2008.
The group, which earlier this year tapped investors for £615 million and cancelled its dividend, said a number of its local bus markets face continued “challenging economic conditions”.
First grew underlying pre-tax profits by 43.7% to £28.3million in the six months to the end of September but after exceptional slumped to bottom line loss of £8m.
Revenues in its UK bus arm, which includes many services in Essex, Suffolk and Norfolk as well as serving cities including Sheffield, Plymouth, Bristol and Glasgow, fell 14% to £490.7m, reflecting the sale of its London bus business and last year’s one-off boost from the London Olympics. Operating profits fell 18% to £17.3m, with higher fuel costs also weighing on the business.
However, bus passenger revenues edged up 1.7% on a like-for-like basis and First said it saw underlying growth in passenger volumes of 0.7%, the first rise since 2008.
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First is trying to boost passenger numbers by tailoring fares and networks to local market conditions but said this would be an “ongoing process”.
First, which operates the Capital Connect, Great Western, ScotRail, TransPennine Express and Hull Trains rail routes, said underlying train passenger volumes rose by 3.6%, with like-for-like passenger revenues rising by 5.7%.
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It is currently bidding to take over franchises including Essex Thameside and plans to apply to run the East Coast Mainline.
First added that its Greyhound bus division in the United States continues to struggle while recovery in its US student bus division was on track.
Overall revenues for the group edged up 1.6% to £3.3billion and First’s debt mountain shrunk 30.5% to £1.45bn.
First said depending on its performance it may pay a final dividend for the year to the end of March.
First has been battered by the tough economy, shrinking government support for public transport and delays in rail franchising, but chief executive Tim O’Toole said the “foundations are in place” for its turnaround.
“Although it is early days in our multi-year plan to improve our returns, resilience and growth prospects, we are seeing clear indications that we are making progress,” he added.
