Company states that lower highstreet footfall and increased congestion is continuing to affect UK Bus operations
FirstGroup has released a trading update for the first quarter of the 2016/17 financial year.
Group revenue in the first quarter decreased by 1.4% in constant currency, with revenue growth in First Student (+1.1%), First Transit (+1.0%) and First Rail (+2.3%) offset by decreases in First Bus (-1.4%) and Greyhound (-5.0%).
The group said there was no change to its overall outlook for the current year. It said it recognised that the degree to which potential net currency benefits as a result of its significant US dollar based businesses will be offset by a more challenging macroeconomic outlook for its UK businesses, following the outcome of the EU referendum.
FirstGroup Chief Executive, Tim O’Toole, said: “Our trading performance as outlined at the recent full year results in June has continued during the first quarter, and the Group expects to make strong progress in the current year despite a challenging and uncertain trading environment in several of our markets.
“This will come from our continued focus on disciplined contract bidding and rigorous cost efficiency programmes, as well as lower fuel costs and more First Student operating days compared with the prior year. Overall, we expect to deliver a significant improvement in our profile of sustainable returns and cash generation going forward.”
In the first quarter, First Bus like-for-like revenue decreased by 1.4%, which the operator said was due to lower high street retail footfall and congestion impairing services in several markets.
The third year of First Student’s contract pricing programme has continued, with approximately two thirds of negotiations completed in the current bid season. The company said it is achieving average price increases above the prior year while its contract retention rate is as targeted.
The group said First Transit is continuing to benefit from growth opportunities in its core service markets, while Greyhound has continued to experience muted passenger demand, with fuel prices lower than in the comparable period in the prior year.
On the EU Referendum, First said it is too soon to judge the overall effect of the decision on the group. More than two thirds of Group adjusted operating profit was generated in North America in the last financial year, and the weakening of sterling since the referendum outcome would, if maintained, result in translation benefits from its US Dollar denominated businesses, albeit partly mitigated by some US Dollar denominated costs incurred in the UK divisions (principally for fuel), and some US Dollar interest and tax costs. The UK-based First Bus and First Rail operations are affected by trends in the wider economy, including factors such as weakening economic growth and lower consumer confidence.
