FirstGroup trims profit outlook after ‘terrible’ weather

Heavy rain affected revenues at First Bus. Picture: Ian Rutherford
Heavy rain affected revenues at First Bus. Picture: Ian Rutherford
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Transport giant FirstGroup has lowered its profit outlook after it was hit by flooding in the UK and driver shortages in the US.

In a third-quarter trading update, the Aberdeen-based group said revenues at its First Bus arm had been affected by lower-than-forecast footfall on Britain’s high streets, combined with “exceptionally” wet weather and flooding in some markets.

Its US school bus operation, First Student, experienced higher costs linked to “acute” driver shortages in some locations as a result of the tightening employment market on the other side of the Atlantic.

As a result, FirstGroup said: “Management’s outlook for operating profit in the current financial year is slightly lowered by trading in the period.”

READ MORE: FirstGroup ‘on road to recovery’ after losing contracts

Group revenues at the former ScotRail franchise holder fell by 9.5 per cent in the third quarter on a constant currency basis, with the decline also blamed on the loss of some rail contracts and the timing of the US school calendar.

But FirstGroup, which received a boost last month when it was awarded the Trans­Pennine Express route for another term, said revenues edged up 0.9 per cent once those effects were stripped out.

READ MORE: FirstGroup secures cross-border rail route

The company also said its Greyhound coach business in the US continues to suffer as passengers are tempted back into their cars by lower fuel prices, with like-for-like revenues at the division down 5.2 per cent.

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 in certain locations.

“While these issues have slightly moderated our trading performance in the period they are not of a magnitude to materially affect our multi-year transformation plans, which we expect to deliver significantly improved cash generation in our next financial year as planned.”