FirstGroup reports 44% profits rise
Press Association: 05 November 2008
Transport company FirstGroup reported higher interim profits and better-than-expected cost savings from its acquisition of US bus firm Laidlaw.
FirstGroup, which runs rail franchise First Great Western (FGW), said adjusted pre-tax profit, which strips out merger costs, rose 44% to £107.1 million in the six months to September 30.
The firm added it has cut costs of £95 million since school bus operator Laidlaw was bought 12 months ago.
In the UK, First said its UK bus division had a "particularly strong period" after revenues increased 7.1% to £578.6 million and operating profits jumped 26% to £60 million. Passenger volumes were up by 2% as more people switched from other forms of transport.
Rail operating profits were flat at £48.3 million but revenues increased 11.2% to £960.6 million after a 6% rise in passenger volumes.
First said all of its rail franchises improved their operating performance, with each network delivering a public performance measure of more than 90%.
Earlier this year First received a formal rebuke for its handling of the First Great Western franchise and was forced into a £29 million programme of improvements at FGW, which runs services to Reading, Bristol, South Wales and the West Country.
First said on Wednesday that FGW's operational performance had "substantially improved" since last year. The company's other rail franchises are First ScotRail, First Capital Connect and First TransPennine Express. Shares rose almost 5% in the wake of the results.
Investec Securities analyst Joe Thomas said: "The interims are slightly ahead of our estimates and all parts of the business are performing well."
Mr Thomas currently targets £339.4 million pre-tax profits for the current year, rising to £376.6 million in 2010. "We think that upgrades to estimates are a possibility as the second half progresses, given the outperformance on synergies," he added.
FirstGroup reports passenger growth — and a hint of slowdown
Railnews: 5th November 2008
FIRSTGROUP is the latest rail operator to report profits and a continuing growth in passenger numbers — although there was the first hint of a slow-down in September.
The group said first-half profit fell 58 per cent due to the costs of integrating the American bus company Laidlaw into its school bus operations in the United States and Canada. But, after stripping out the merger costs, underlying pre-tax profit rose by 44 per cent to £107.1 million in the six months to 30 September.
Rail operating profits were flat at £48.3 million — but revenues increased 11.2 per cent to £960.6 million after a six per cent rise in passenger volumes. This is in line with recent announcements from other train operating company owners Arriva, National Express and Stagecoach, which reported passenger numbers up by between nine and 11 per cent.
However, there was a hint of the impact of the economic downturn. First said Capital Connect saw a marginal slowdown in growth in September, which analysts said was due to a slowing in London employment.
All of First’s passenger franchises — Great Western, Capital Connect, TransPennine Express and Scotrail — reported improving punctuality, with ‘public performance measures’ of over 90 per cent, including a marked improvement in Great Western’s performance, which First said had “substantially improved” since last year.
• Chief Executive Sir Moir Lockhead told BBC News that higher fuel prices and the reduction in driving in the United States had also led to a five per cent increase in passengers travelling on Greyhound buses — part of the Laidlaw business that FirstGroup acquired last year.
FirstGroup sees wheels come off in USManagement Today: 05-Nov-08
A sign of the times for Barack Obama? The British owner of US Greyhound buses has seen profits slump...
FirstGroup, the British transport company that gets 2.5bn people from A to B every year, saw profits slide 24% to £54m in the six months to September thanks to its latest acquisitions in the US. The group, which already operates the iconic Greyhound bus service, has just bought a US bus operator called Laidlaw, which runs the yellow school buses you always see on TV – and the one-off costs of the deal pushed profits down. On the other hand, revenues were up as more people opted for public transport – showing that high fuel prices are not necessarily bad news for everyone…
You might not know an awful lot about FirstGroup, but you’ll be familiar with their operations: its four UK rail franchises include First Capital Connect and First Great Western, and it runs more than 20% of all our buses. And it was delighted to report today that more of us are leaving the car at home and taking public transport instead: rail passenger revenue was up nearly 10%, thanks to a 6% growth in passenger numbers, while bus revenues were up nearly 8% (on a 2% increase in passenger volumes). ‘We are encouraged by the growing number of people switching to public transport from other modes of travel,’ beamed CEO Sir Moir Lockhead.
Overall, revenues increased to £2.8bn, a more-than-healthy 57% jump. Of course as you might guess from the fact that revenue rises are outstripping passenger increases, this is partly because it’s been increasing its fares – not something it’s shouting about in today’s results, although it will argue this is fair reward for its improved service quality and operating performance. Either way, this enabled it to boost profit margins, despite the fact that it was paying more money for its vehicle fuel than at any other time in its history.
Over in the US, the ongoing integration of Laidlaw (which FirstGroup bought 12 months ago) did take a sizeable bite out of its bottom line – although Lockhead insisted that ‘excellent progress’ had been made, and cost savings are apparently ahead of schedule. And Greyhound also seems to be performing pretty well, with revenues up 5% and ‘On Time Performance’ (i.e. not being late) up 10%. ‘We have delivered a step change in the performance of the business,’ boasted Lockhead. In recent years, the business been more like a fat Labrador with a dodgy hip than a Greyhound.
So hopefully its US operations will stop being a drag on figures before too long. And as times get tougher on both sides of the Atlantic, there’ll no shortage of drivers opting to take the bus instead...