FirstGroup chief confident of '˜strong progress'

FirstGroup chief executive Tim O'Toole. Picture: Contributed

Updating investors on recent trading at the Aberdeen-based transport giant, O’Toole said the group was poised to benefit from lower fuel costs and more operating days for its school bus business in North America.

“Overall, we expect to deliver a significant improvement in our profile of sustainable returns and cash generation going forward,” he added.

His comments came as FirstGroup, which last month said it had overcome a “challenging” trading environment to post a 7.3 per cent rise in annual profits revealed a 1.4 per cent dip in overall revenues during the first quarter of its new financial year.

At its rail operation, which runs the Great Western Railway and TransPennine Express routes, like-for-like passenger revenues rose 2.3 per cent.

Revenues at First Student – its school bus division on the other side of the Atlantic – were up 1.1 per cent, but fell 5 per cent at its Greyhound coach arm.

Back on home turf, like-for-like passenger revenues at First Bus reversed 1.4 per cent. The group blamed the performance on a decrease in the number of shoppers venturing onto Britain’s high streets and “congestion impairing services in several of our markets”.

It added: “We continue to take action to offset the challenging market backdrop by merging or closing a number of depots and other cost efficiencies, and expect to deliver margin progression during the current year from the benefits of past cost-saving actions, additional cost and operational efficiency initiatives and reduced fuel costs.”

While FirstGroup said it was too early to judge the overall impact on its business from last month’s Brexit vote, it noted that the fall in the value of sterling would provide some benefits, as more than two-thirds of last year’s adjusted operating profit was generated in North America.

“Like other business sectors, our UK-based First Bus and First Rail operations are affected by trends in the wider economy, including factors such as weakening economic growth and lower consumer confidence,” the group said.

“The degree to which the net currency benefit from our US-based operations will be offset by more challenging UK economic conditions for our UK-based businesses is uncertain at this stage.”