O'Toole upbeat despite figures
FirstGroup suffers slump in first half profits
Transport company FirstGroup saw adjusted half year operating profit fall by 14.7% to £88.4 million on a 17% decline in revenue to £244 billion after losing out on rail franchises.
Chief executive Tim O’Toole said the first half results did not reflect progress on its “transformation plans”, including a new deal on student buses and cost improvements in the core First Bus division.
“Our expectations for the Group’s overall trading performance for the full year are slightly increased as a result of the change in the basis of estimate for rail pensions,” he said.
“We continue to expect underlying net cash flow for the full year to be broadly flat. Our multi-year transformation plans are now driving the improvements in our underlying performance that are central to sustainable value creation and cash generation over the medium term.”
- Overall trading for the Group in line with management’s expectations, with outperformance in some areas offsetting the more challenging market environment in others
- Changes to rail franchise portfolio reduced revenue by £586.2m and operating profit by £13.6m compared with the prior period
- Fewer First Student operating days this year due to timing of school calendar reduced revenue by £18.3m and operating profit by £7.8m in the period, which will reverse next year
- Excluding the above effects, Group revenue increased by 0.8% on a constant currency basis
- As a result of a change in the basis of estimate for First Rail pensions, management’s expectations for the Group’s overall trading performance for the full year are increased by £15m (H1 effect of £7.2m)
- Confident that the transformation plans are driving the improvements in underlying performance that are central to sustainable cash generation over the medium term
- Matthew Gregory appointed as Chief Financial Officer with effect from 1 December 2015
- First Student: delivered second year of contract pricing increases, cost efficiency benefits moderated by driver shortages and fewer operating days
- First Transit: further contract awards helping to offset reduced Canadian oil sands activity
- Greyhound: yield management system launched as planned; cost base flexed to help mitigate lower demand from cheaper fuel
- First Bus: expanded cost efficiency actions are maintaining turnaround progress, despite mixed trading conditions
- FirstRail: financial performance towards the top end of our expectations, underpinned by strong passenger volume growth