FirstGroup Q1 trading update

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UK Bus is benefiting from First’s transformation programme. An Optare Solo SR delivered this year is seen here in GosportFirstGroup says trading for the first quarter of the 2014/15 financial year is in line with management’s expectations and the firm’s ‘transformational programmes.’

CEO Tim O’Toole said: “In First Student we are encouraged by the progress we have made to address pricing in our contract portfolio and by our overall retention rate which, to date, is at the upper end of our planning assumptions. In UK Bus and Greyhound the actions we are taking are achieving good growth. Across the Group we are confident we have the right programmes underway to build on our market-leading positions and improve performance.”

First has accelerated its programme to address contract portfolio pricing, ensuring an appropriate level of return on contracts won or retained.

“We expect the proportion of low margin contracts in our portfolio to be below 30% in 2014/15 (from 36% in 2013/14), and as additional multi-year contracts come up for renewal we will continue to reduce this further,” it said.

“First Transit delivered another solid performance in the first quarter with new business wins in our paratransit, fixed route and vehicle maintenance segments. For the year we expect to deliver good margins with relatively modest capital investment.

“During the first quarter like-for like revenue increased by 3.4% (at Greyhound) compared to the same period last year, continuing the improving trends seen over the course of the prior year (excluding the impact of severe weather in Q4).”

At UK Bus like-for-like passenger revenue increased by 2.7%. “We are seeing the results from our transformation programme to improve our commercial proposition, drive volume growth and regain pricing competitiveness in line with the market,” the firm said.

“As we rebase our local fares and networks we are stimulating passenger growth with like for- like volumes increasing by 2.7% in the first quarter. To date, we have completed 12 major redesigns together with numerous other upgrades and initiatives. The programme of significant network changes is now nearing completion, though our management structure is now locally focused to ensure that commercial opportunities continue to be developed.

“While there is still some way to go, we are delivering our plan as forecasted to restore double digit margins to UK Bus by 2017. We expect improvements in underlying revenue and margin in both the first and second half of 2014/15 compared with the prior year, with progress particularly weighted to the second half of the year as we reach the anniversaries of a number of fares changes.

“Our UK Bus division was awarded the contracts to transport athletes, technical officials, media and sponsors during the Commonwealth Games, and provide additional shuttle services to transport the large numbers of spectators expected.”