FirstGroup warn of northsouth divide

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FirstGroup have warned that a north-south divide is opening up in its UK bus business, with growth slowing in Scotland and northern England.

The Aberdeen-based operator blamed the weak economy and lower consumer spending in the north, where it has more urban than rural services.

In FirstGroup’s UK bus division, like-for-like passenger revenue rose by 1.8% in the last three months of 2011, up slightly from the 1.4% in the first half of its financial year.

But the firm, which brings in 60% of its UK non-London bus revenues from Scotland and the north of England, warned of “challenging trading conditions” ahead.

The company said it won’t generate as much cash this year as previously predicted because the market has not been right to sell assets from its UK bus division, including some depots.

The interim management statement, published on Thursday, January 12, said: “Our priority remains to maintain our strong cost discipline and focus while equipping our networks, as appropriate, for future growth.”

FirstGroup now expects to have £100-115m of net cash at the end of its financial year, compared with previous predictions of about £150m.

Analysts raised concerns at the speed with which the group would be able to pay off its £1.8bn debt given the lower net cash figure.

In America, the company said it remained on track with the turnaround plan for its school bus business and like-for-like revenue growth at its iconic Greyhound intercity coach operation had risen to 5.9% in the third quarter from 5.6%.

The statement concluded: “We have a clear focus on strengthening our businesses for the future. The Group has good prospects to deliver long-term value for shareholders in a sector which is a key enabler of economic growth.”