FirstGroup spurred on by profit growth

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FirstGroup has posted its preliminary results for the year ended March 31, 2017.

Group revenue increased by 8.3% to £5.65bn, though on a constant currency basis, in had decreased by 0.5%. Operating profit increased from £246.3m in 2015, to £283.6m, a 15.1% increase. The increase on a constant currency basis was 2.3%.

Profit before tax increased dramatically by 34.4% to £152.6m, with earnings per share rising by 24% to 9.3p.

Like-for-like revenue at First Bus decreased by 0.6%, with the operator citing challenges across the industry. It said cost control actions had partially mitigated the margin impact of currency fluctuations on the cost of its fuel.

FirstGroup CEO, Tim O’Toole, said: “We report our results against the backdrop of the derailment of a tram operated by one of our subsidiaries on behalf of Transport for London in Croydon on November 9, 2016, a tragedy that has shocked and saddened us all. We are profoundly sorry that such an incident could take place aboard a service we operate. We are focused on understanding the exact cause of this incident and will continue to provide our full support to the ongoing investigations. Our thoughts remain with the families and friends grieving for the seven people who lost their lives, and those who were injured and affected by this terrible event.

“We are encouraged by this year’s improved financial results, with our largest division First Student delivering a significant margin improvement despite continued driver recruitment challenges, while our First Bus and First Rail operations have faced more challenging market conditions this year. Through rigorous focus on sustainable operational and capital efficiencies, we were also able to generate substantially improved net cash inflow of £147m.

“Looking ahead, our financial objectives are to make further progress while maintaining our focus on cash generation, despite the mixed trading environment in our markets. Overall this year’s results demonstrate the progress we have made in repositioning FirstGroup to deliver for our customers while creating value for our shareholders, commensurate with our leading market positions and scale.”