FirstGroup plc has reported the following trading update for the period to the
end of December 2016.
Summary:
* Trend of overall trading and expectations for the full year unchanged
* Reported Group revenue increased by 12.8% in the third quarter, benefiting
from favourable currency translation. Group revenue in constant currency
was flat, with growth in North America offset by previously announced rail
franchise changes and First Bus trading
Q3 YTD
Increase/(decrease) vs comparable period, in constant 2016/17 2016/17
currency
First Student revenue +1.0% +0.5%
First Transit revenue +5.5% +4.0%
Greyhound like-for-like revenue +1.2% (2.5)%
First Bus like-for-like passenger revenue (0.6)% (1.1)%
First Rail like-for-like passenger revenue +1.1% +0.8%
Commenting on today's announcement, FirstGroup Chief Executive Tim O'Toole
said:
"Our overall trading performance continues to support our expectation of good
progress for the current year. Our substantial North American operations are
delivering encouraging performances and are benefiting from currency tailwinds,
but we continue to experience tough trading conditions for our First Bus and
First Rail operations in what remains an uncertain UK macroeconomic
environment. We remain focused on disciplined execution to deliver
significantly increased cash generation for the full year."
Divisional update on the third quarter:
In First Student the company continue to benefit from ongoing pricing strategy,
aiming to generate appropriate returns from a more focused book of contracts.
Although the strong US employment market continued to cause driver shortages in
some areas, they have responded with improved recruitment processes and
marketing. With solid execution since the successful school start-up, the company are
well positioned to achieve our targeted margin progression for the year.
First Transit's revenue performance in the third quarter benefited from organic
growth and the commencement of new business, including the successful
mobilisation of the group's first US commuter rail contract in Denton, Texas. In the
period First Transit continued actions to recover the cost increases incurred
in certain contracts in the first half.
Improving Greyhound volumes resulted in like-for-like revenue growth of 1.2% in
the third quarter, benefiting from higher fuel prices than the comparable
period last year and the continued development of our algorithmic pricing and
yield management systems.
Industry-wide market conditions continue to be challenging for First Bus, with
mixed Christmas trading for the UK high street and ongoing congestion issues in
several local markets. Like-for-like passenger revenues decreased by 0.6% in
the third quarter, a modest improvement on the first half. We continue to focus
on cost efficiencies including ongoing depot consolidation to improve margins,
while investing in our customer offering through smarter ticketing and
real-time passenger information.
In First Rail third quarter like-for-like passenger revenue growth of 1.1%
continued to reflect the moderating growth rates seen across the industry. The
impact of the slowdown for GWR has been exacerbated by the volume of
infrastructure upgrade work taking place on the network; TPE revenue
performance continues to be above the industry average year to date. We
continue to work closely with Transport for London and others to assist those
affected by the tragic Tramlink incident which occurred in November 2016, and
to support the ongoing investigations.
First were delighted that Hull Trains was named Rail Operator of the Year at the
recent National Transport Awards. The group recently announced the formation of two
joint ventures with Trenitalia UK to participate in the East Midlands and West
Coast Partnership rail franchise competitions.
In the third quarter the Group repaid $50m of private placement notes from cash
balances.
The Group is scheduled to announce results for the year to 31 March 2017 on
Thursday 1 June 2017.
