FirstGroup gets Brexit boost from sterling despite flat performance in UK
FirstGroup enjoyed a Brexit boost as the devaluation of sterling delivered a strong revenue increase despite its continued struggles in its UK buses business.
The figures
Group revenue increased by 12.8 per cent because of the devaluation of sterling since the EU referendum, as foreign earnings became more valuable. Without the sterling boost the group’s revenues were “flat”, it said.
US revenues drove most of the increase, with a four per cent rise in revenues in the three quarters to December at its First Transit subsidiary, which runs bus services in America. First Student, which runs American school buses, also saw revenues edge up by 0.5 per cent.
A third quarter gain in passenger revenues for the long-haul Greyhound buses in America has so far not made up for an annual fall, reaching 2.5 per cent year-to-date by December.
The UK First Rail business, which runs the Great Western Railway (GWR) and TransPennine Express franchises, grew like-for-like passenger revenues by 0.8 per cent.
However, passenger revenues at First Bus, which has a fifth of the UK bus market outside London, fell by 1.1 per cent.
Why it's interesting
The Scottish transport company performed in line with expectations as US revenues made up for niggles in UK operations.
British commuters outside of London will be familiar with some of the problems faced by the UK bus division: “congestion issues” are affecting performance, as well as dampened Christmas trading on the high street.
And anyone travelling from London to Wales and the west of England will be able to corroborate claims that GWR’s slow revenue growth has been caused by infrastructure upgrades.
However, commuters in the north of England are driving higher growth, as the Transpennine Express between Manchester and Leeds, among others, grew revenues above industry average.
Meanwhile there is no update on the Croydon tram crash in which seven people died. FirstGroup reports it will “continue to work closely with Transport for London and others to assist those affected by the tragic Tramlink incident which occurred in November 2016, and to support the ongoing investigations.”
What First Group said
Tim O'Toole, chief executive at FirstGroup, said: "Our overall trading performance continues to support our expectation of good progress for the current year.
Our substantial North American operations are delivering encouraging performances and are benefiting from currency tailwinds, but we continue to experience tough trading conditions for our First Bus and First Rail operations in what remains an uncertain UK macroeconomic environment.
He added: “We remain focused on disciplined execution to deliver significantly increased cash generation for the full year."
In short
A tale of two countries for FirstGroup as US growth makes up for a traffic jam in UK performance.