First Group feels the impact of a harsh winter

Transport operator FirstGroup’s latest trading update since half-year results back in September, reveals reported group revenue up 0.7% year to date.

Group revenue in constant currency and excluding the new South Western Railway rail franchise was up 1.1% year to date.

For four of First Group’s divisions, trading trends in the period were similar to the first half. However, Greyhound's long-haul business was affected by intensifying airline competition, including in the key holiday season.

All three US divisions also encountered extremely challenging weather conditions in January. As a result, the Group's outlook for adjusted EPS is slightly reduced overall, but there is no change to management's expectation of substantial cash generation for the year.

Debt management

Commenting on today's announcement, FirstGroup Chief Executive Tim O'Toole said: "We reached an important milestone in the period with our long-dated bond portfolio beginning to mature, allowing us to significantly reduce our interest burden by starting to refinance and rebalance the Group's debt.

He added: "In the period, First Bus has made encouraging margin progress as we benefit from our cost efficiency actions and revenue growth, while our First Rail franchise portfolio continues to generate value for the Group despite infrastructure challenges.

“First Student’s momentum continues to be tempered by the strength of the US employment market, with no easing of the driver shortages experienced in recent years, while First Transit has taken a number of actions to help restore margins in the second half as planned. Although Greyhound’s point-to-point business continues to grow, this was more than offset by significant reductions in long-haul volumes in the period.

“Our North American businesses were also tested by the severe snowstorms which affected the Atlantic seaboard from Nova Scotia down to Florida in January 2018. Notwithstanding the mixed trading picture in the period we continue to expect substantial cash generation for the year as a whole.”

In early morning trading, First Group shares fell over 5% to 90.75.