Firstgroup hikes full-year profit forecast as open access drives growth
Firstgroup has said profit in 2024 is expected to come in ahead of expectations due to soaring demand for its open-access services run by Lumo and Hull trains.
Firstgroup said in a statement on the London Stock Exchange that Firstrail’s performance had surpassed expectations since November, primarily driven by “strong demand” and “effective yield management” in open access.
As a result, adjusted operating profit and earnings are expected to exceed prior forecasts, having already been hiked by between £14m and £20m in October.
Firstgroup said it expected to end the fiscal period with an adjusted net cash position of £60m to £70m, up from £20 to £30m at the end of the year. It said it still had £40m of a £115m share buyback programme still to be completed.
Open access providers in the UK run without being bogged down by hefty franchising fees and require no taxpayer subsidy. The model was introduced post-privatisation to encourage competition with Britain’s mainstay train companies.
Graham Sutherland, Firstgroup chief executive, said: “Our focus on operational delivery, driving demand for our services and growing and diversifying our portfolio has resulted in further progress in the second half of our financial year.
“This leaves us well positioned to create further sustainable value for all our stakeholders.”
The transport operator added that trading at First Bus also remained strong and in line with expectations. It anticipates having more than 600 electric buses in England, around 15 per cent of its fleet, by Spring 2024.
Shares in Firstgroup rose 0.2 per cent in early trading.
Lumo and Hull’s strong performance comes after the FTSE 250 firm launched a bid in January for a new London-Sheffield open access rail service.
Firstgroup said consultations between regulators and industry partners have concluded, and capacity modelling and discussions with rolling stock companies have now begun. It said it expected the service to begin in the second half of 2025.
Lumo has separately been involved in discussions to extend a number of its daily London to Edinburgh journeys to Glasgow.
“Discussions are in progress with Transport Scotland and Network Rail with regards to the final route options and timings, ahead of an application to the ORR for access rights,” Firstgroup noted.