FirstGroup full year results in line with expectations

21st May 2014 07:09

- Revenue down 2.7 per cent- Operating profit up 5.5 per cent- No dividend for some timeTrain and bus company FirstGroup made progress with four of its divisions, growing underlying group operating profits despite the extreme weather hitting US operations, but the recovery of the First Student in the US was slower than hoped. Disposals put the brakes on the top line, holding back full-year group revenue 2.7% to £6.7bn, but adjusted operating profit climbed 5.5% to £268.0m. Adjusted earnings per share fell 31.8% due to the dilutive effect of the rights issue in June 2013, with net cash flow broadly flat for the year, in line with expectations.Group margins increased, with improvements in UK Bus, First Transit, and UK Rail more than offsetting declines in First Student and Greyhound. Any reinstatement of the dividend looks some way off due to the recovery of First Student and UK Bus divisions and its capital investment programme.UK Bus, in the middle of a transformation programme, is beginning to show that it is on the right track. Revenues and profits fell but management are encouraged by the delivery of improvements in key metrics.Chairman John McFarlane said: "First Transit, Greyhound and UK Rail are delivering returns broadly in line with what I would expect, though clearly we have significant opportunity for further improvement."On the other hand, two of our businesses, First Student and UK Bus, have not performed, and are well short of their potential and delivering lower margins than their competitors. Although both divisions have faced challenging economic conditions in their respective markets, we cannot escape that we should have managed them better."Revenues and profits both fell at First Student, the US school bus segment, was hit by severe weather, but management have accelerated programmes to address contract portfolio pricing and deliver further cost savings.First Transit, the US bus business, grew profits despite a slight fall in revenues.US coach travel segment Greyhound saw revenues and profit fall, but there was an underlying improvement in demand trends and continuation of profitable expansion of Greyhound Express, partially offset by weather disruption to the network.UK Rail delivering solid revenue growth underpinned by continued passenger volume increases and strong operational delivery.OH