East Anglia: Regional bus operator First reports fall in half-year profits
TRANSPORT operator FirstGroup today insisted that it was seeing signs of recovery within its bus business despite reporting a 33% plunge in first-half earnings at the division.
First, which is the UK’s biggest bus operator, with its network including many rural services in East Anglia, posted operating profits of �39.6m for its bus arm, down from �59.4m at last year’s half-way stage, as higher fuel costs, lower demand and reduced subsidies all took their toll.
Bus passenger revenues rose by 2.6% on a like-for-like basis in the first half but the decline in earnings contributed to a 42% fall in group-wide underlying pre-tax profits to �48.7m in the six months to September 30.
However, First said there were encouraging signs that a “clear and detailed plan” to fix the bus operation was beginning to work in some of its markets.
Alongside local fare promotions, the group is revamping its bus depots and vehicle repair operations, and spending �160m on 1,000 new buses and revamping a further 750 as part of a �4m modernisation programme.
The group is also investing another �27m in new ticketing technology, including a “touch-in, touch out” contactless payment system enabling travellers to pay using bank cards.
Today’s half-year figures also showed a sharp drop in earnings at the group’s rail division, down 36% to �35.4m, although it said this was down to an expected hit from First TransPennine Express, which is operating under new franchise terms at margins closer to the industry average.
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First, which operates a quarter of Britain’s rail lines, with its franchises also including First Great Western, First Capital Connect and Scotrail, said like-for-like rail passenger revenues rose 8.1% in the first half.
It added that it remained committed to UK rail operations, despite the cancellation of its deal to take over the West Coast franchise as a result of flaws in the bidding process.
The Department for Transport has already said it will repay bidding costs to the four groups involved in the botched bid process and First said it was in discussions with Government over the bill it incurred.
Profit falls in UK us and rail were partially offset by a better performance elsewhere, with the group’s US Greyhound coach division reporting a 10% rise in operating profits to �33.5m, although its FirstStudent school bus service in the US saw earnings dip from �5.5m to �5.2m.
First shief executive Tim O’Toole said: “The group is in a period of transition and while there is significant work still to do, we are satisfied with the progress of the actions we have taken so far.”
He added: “We remain committed to maintaining our leading position in the rail market and are actively engaging with the ongoing reviews to help shape the future of franchising.”