South Western Railway franchise drives FirstGroup revenues higher
The company reported a statutory loss of £1.9 million for the six months to September 30.
FirstGroup revenues accelerated in the first half of the year, thanks to its newly run South Western Railway franchise and beneficial currency effects.
The transport giant reported an 8.1% jump in revenues to £2.77 billion for the six months to September, driven in part by its UK business after taking over the South Western Railway franchise alongside MTR – with trains running under its umbrella from late August.
Revenue growth was also supported by favourable currency effects from its US dollar-based business.
But when stripped of those currency translations and adjusted for the introduction of new rail operations, revenues rose just 0.9%.
The company slumped to a bottom-line loss of £1.9 million for the six months to September 30 compared with a profit of £11.1 million a year earlier, which the group said “principally” reflected that its results a year earlier were boosted by the sale of one of its Greyhound terminals for £21.6 million.
Growth and contract wins by its First Transit business were also offset by the impact of severe hurricanes on its Puerto Rico operations, where it runs two vehicle services contracts and a fixed route business.
Chief executive Tim O’Toole said: “The overall trading performance and significantly increased free cash generation of the group in the first half was consistent with the plans we outlined at the start of the financial year.
“Solid performances from most of our businesses are partially obscured by the impact of the recent severe hurricane on our operations in Puerto Rico.”
But the company is expected to see a stronger latter half, which tends to benefit from the restart of the school year and the subsequent run of school bus routes.
“In the second half we will benefit from our normal seasonal bias, our ongoing focus on cost efficiencies and from additional business which commenced in the period, including the South Western Railway franchise,” Mr O’Toole said.
However, FirstGroup noted a number of risks that could impact the business in the remaining six months of the financial year, saying an “improving economic climate” and low fuel prices could hurt demand for Greyhound and First Bus, as other types of transport become more affordable.
But worsening economic prospects in the UK could reduce demand for First Rail, while political and regulatory changes – which are “constantly changing” – could impact the group’s operations.
The business has so far benefited from a 3.2% rise in like-for-like passenger revenue from its First Rail operations in the first half of the year, while equivalent figures for First Bus rose 0.6%, and like-for-like revenue at Greyhound increased 1.2%.
Mr O’Toole noted that the results were released nearly a year after the fatal crash on its Croydon Tramlink line last November, which killed seven people and injured more than 50 others – a tragedy which he said “continues to weigh heavily on us”.
“We continue to provide our full support to the ongoing investigations into the incident, as it is absolutely essential that the reasons for the derailment are established,” Mr O’Toole said.