FirstGroup warns on profits as flooding takes toll on bus services

FirstGroup has lowered its full year profit expectations following a difficult third quarter.

FirstGroup has lowered its full year profit expectations following a difficult third quarter. - Credit: Archant

Bus and train operator FirstGroup has warned over annual profits after “terrible” weather and flooding at the end of last year hit its bus business.

First said today that revenues fell by 9.5% in its third quarter, covering the period to the end of December, largely due to the recent loss of a number of rail franchises in the UK and the timing of the school calendar affecting its First Student school bus business in the US.

But the group said its UK bus business had also been impacted by the recent flooding and lower-than-expected numbers of shoppers making trips into town centres in the run-up to Christmas, with like-for-like revenues in the division remaining flat.

First, which added that First Student had also suffered as a result off a driver shortage, warned that its outlook for operating profits over the full year to the end of March was now “slightly lowered”.

Chief executive Tim O’Toole said: “Our transformation plans continue to make headway despite a challenging third quarter trading period in our markets, with disappointing retail footfall and the terrible weather affecting First Bus, and our largest division First Student experiencing acute driver recruitment and retention challenges.”

The group said its rail arm, which includes Great Western Railway and TransPennine Express, saw a fall in demand in the weeks after the terrorist attacks in Paris as well as disruption from the recent flooding.

However, like-for-like rail revenues still grew by 5.6% in the third quarter and First said the division’s full-year performance would not be impacted.

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Despite other rail franchise losses, First last month won a contract to continue running TransPennine Express and it is on the shortlist for the new franchise covering East Anglia where it is already a major operator of bus services.