Alexander Dennis drives off with £21m FirstGroup order

First Bus, part of transport company FirstGroup, is investing 77.7 million pounds in 385 new buses, of which 90 per cent will be fitted with ultra-clean Euro 6 engines. Picture: PA
First Bus, part of transport company FirstGroup, is investing 77.7 million pounds in 385 new buses, of which 90 per cent will be fitted with ultra-clean Euro 6 engines. Picture: PA
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Alexander Dennis has secured a further major contract that will help its return to top-line growth and stoke interest in a possible sale of the Falkirk-based bus builder.

The firm, one of Scotland’s largest manufacturing employers, will build the majority of 113 new vehicles set to be rolled out across First Bus routes in Aberdeen, Glasgow and the east of Scotland. They are due to enter service this summer.

The £21 million deal is part of a larger £77.7m order that will see 385 new vehicles deployed across the UK bus fleet of Aberdeen-based FirstGroup. Wrightbus of Northern Ireland will produce 248 of the vehicles, nearly all of which will be fitted with the latest Euro 6 low-emission engine.

Colin Robertson, chief executive of Alexander Dennis, said the deal with FirstGroup will support jobs within his company and throughout its network of suppliers.

“We are delighted to have won this very significant order and to be continuing our long-established and thriving relationship with FirstGroup,” he said.

“This latest order is a huge endorsement of our new-generation, market-leading midi and double deck buses and a further demonstration of FirstGroup’s commitment to the green technologies of tomorrow.”

The contract is the latest in a string of new business orders at Alexander Dennis, including an agreement to supply more than 250 vehicles to Canada’s Metrolinx in a deal thought to be worth £300m.

Following the Metrolinx contract, the firm said it would set up a chassis assembly facility in Ontario, with the first bus deliveries due next year.

The Canadian deal was followed a few weeks later by the announcement in March that the company will build 408 vehicles for UK and mainland European operations of Perth-based Stagecoach. Earlier this month, the firm also won a major chunk of a £45m upgrade to Arriva’s UK fleet.

These deals should help the company – which could reportedly go up for sale at £300m – bounce back from a challenging 2014. The strength of the pound hampered trading last year at the same time as Alexander Dennis was investing heavily in new overseas facilities.

International sales fell by 3 per cent to £165m but the company said 2014 had been an “exceptionally busy year” with two new markets opening up in Singapore and Malaysia and helping to offset lower sales in Hong Kong.

Overall sales fell by 7 per cent to £503m in 2014. Excluding exceptional costs, underlying operating profits almost halved to £18.7m.

However, Robertson has predicted a return to top-line growth in 2015, reviving the upward trajectory that Alexander Dennis has managed since it was rescued from the brink of insolvency 11 years ago.

A consortium led by Sir Angus Grossart, Stagecoach co-founder Sir Brian Souter and former Rangers owner Sir David Murray purchased the business in 2004 after its parent company, Transbus, went into administration.

The Highland Global Transport (HGT) investment portfolio set up by Souter and his sister Ann Gloag now owns a majority stake of nearly 58 per cent of Alexander Dennis.

HGT is said to have held preliminary talks with HSBC and other investment banks about a possible sale of the bus business. These reports, which first appeared earlier this month, have been described by Alexander Dennis as “speculation”.

The bus maker employs more than 2,400 people around the world, including about 900 in Falkirk. It has significant overseas operations in Hong Kong, Malaysia, New Zealand, Singapore and the US.