FirstGroup has reported strong performance across its businesses in the first 2023 half-year, with a growth in profit in both bus and rail divisions. Its First Bus division delivered further margin expansion, and remains on track to have over 600 electric buses in service by March this year. 1.1m passenger journeys made on its buses represents an increase from 1.0m in the previous period, with passenger volumes up around 8%. Total revenue increased by 18% to £504.9m, up from £427.7m in the previous period, despite a £19m reduction in government funding, and its operating margin increased to 7.1%.
Commenting, Chief Executive Officer Graham Sutherland said: “I am pleased to report another set of very strong results for the first half of our 2024 financial year. First Bus is delivering sustainable revenue growth as we continue to transform the business and our First Rail division also performed well. This is testament to the capabilities and continued hard work of all our teams across the Group.
“We are a resilient and profitable business which is well-positioned to create long-term, value-accretive growth. Leveraging our leading positions in bus and rail, supported by our strong balance sheet enables us to continue to play a critical role in supporting governments’ economic, societal and environmental goals.”
“In First Bus we have seen further sustainable profit growth as we benefit from the management actions to transform the business, as well as the use of our enhanced data to improve operational and cost performance. We have also been assisted by a circa 6% increase in the number of drivers during the period, compared to the driver shortages experienced in H1 2023, which has contributed to an improvement in operated vs. scheduled mileage during H1 2024.
“We have continued to grow our Adjacent Services business, thanks to a number of contract extensions as well as the inclusion for the full period of Airporter and Ensignbus that we acquired in FY 2023. We also successfully launched a new Aircoach Leicester-Birmingham airport 24-hour express service in September and are seeing demand build steadily. The adjacent bus services market in the UK is considerable, and we are actively reviewing a number of opportunities to grow the business and win further contracts leveraging our national footprint and successful track record in managing large contracts effectively.
“Government policy towards the bus sector remains highly supportive and has contributed to the growth in passenger volumes we have seen over the last few months. We welcomed the recent announcements regarding the extension of the £2 fare cap in England to the end of December 2024 and the award of additional Bus Service Improvement Plan funding for bus services in the North of England and the Midlands.
“Although clearly sensitive to broader consumer spending and inflation trends, we expect to make some further progress against our expectations for First Bus in H2 2024 as we continue to benefit from the actions we have taken to transform the business. We are confident of achieving our medium-term 10% operating margin target for First Bus.”
