FirstGroup plc has released a thirdquarter trading update from October 1 to December 31, 2012 (“the period” or “the third quarter”).
Trading for the Group during the third quarter was in line with its expectations, excluding the one-off effect of Hurricane Sandy which First claim adversely impacted the operating profit of First Student by $15m.
Continued strong support from fixed income investors in November led to FirstGroup’s issue of £325m of 10-year bonds being significantly oversubscribed. The proceeds were used to pay down debt, to reduce reliance on bank borrowings and extend its debt maturity profile.
First’s transit division “generated good operating results from its range of operations, the majority of which require low capital investment.” First said it continues to see good contract retention rates and develop opportunities from a healthy pipeline of new contract bids, and is proactively working through a small number of historic legal claims within First Transit, with settlement discussions scheduled for February 2013.
During the period like-for-like revenue growth within Greyhound was 1.6%, with US operations continuing to achieve a strong performance. During the period Greyhound expanded Express service to new states including Louisiana, Oklahoma, Nevada and Ontario, Canada.
Like-for-like passenger revenue growth in First UK Bus was 2.1% over the period. First continues to work through its programme of disposals. In November 2012 First agreed the sale of its Birkenhead and Chester operations for £4.5m and recently announced the sale of its Kidderminster and Redditch bus businesses to Rotala PLC for a gross consideration of £1.5m. First expects UK Bus operating margin to be approximately 8% for the full year.
First’s rail division continues to benefit from strong passenger growth across all franchises and like-for-like revenue increased by 8.1% in the period. During the period the Scottish Government announced the ScotRail franchise will end on March 31, 2015, from its previous end date of November 9, 2014.
Tim O’Toole, Chief Executive, said: “We are confident that the actions we are taking will strengthen our business and its prospects for long term growth. While there is significant work still to do, we are satisfied with the progress of the actions taken so far, though we remain cautious in respect of continued economic weakness.
“As previously stated, following the uncertainty caused by the Department for Transport’s decision to delay its refranchising programme the Board held the interim dividend at last year’s level. We will consider the full year dividend in May 2013, by which time the prospects for our rail division are expected to be clearer.”