First Group shares fall as ‘extreme weather’ hits outlook
The FTSE 250 firm sank more than 9% in morning trading.
Shares in First Group have shifted into reverse after the bus-to-train firm warned over profits as it grapples with fierce weather conditions and stiff competition from airlines.
The FTSE 250 firm sank more than 9% in morning trading on the London Stock Exchange, with the outlook for annual earnings per share expected to be “slightly reduced”.
First Group, which operates America’s Greyhound bus service, said its three US divisions had been confronted by “extremely challenging” weather in January while airline competition had “intensified”.
Sweeping tax reforms enforced by US President Donald Trump impacted the business, helping to drive down its tax rate to the “mid-20s”
The firm said it would also rake in £14 million a year in interest rate savings thanks to a $275 million (£197.3 million) bond refinancing.
Chief executive Tim O’Toole said: “We reached an important milestone in the period with our long-dated bond portfolio beginning to mature, allowing us to significantly reduce our interest burden by starting to refinance and rebalance the group’s debt.”
Reported group revenues climbed 10.7% for the year to date, boosted by like-for-like passenger revenues at First Rail and First Bus, which rose 3.2% and 0.9% respectively.
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Stripping out exchange rate movements and the South West Rail franchise, group revenues lifted by 1.1% over the period.
Mr O’Toole added: “Although Greyhound’s point-to-point business continues to grow, this was more than offset by significant reductions in long-haul volumes in the period.
“Our North American businesses were also tested by the severe snowstorms which affected the Atlantic seaboard from Nova Scotia down to Florida in January 2018.
“Notwithstanding the mixed trading picture in the period we continue to expect substantial cash generation for the year as a whole.”