Firstgroup’s rail division exceeds expectations
Firstgroup’s rail business is trading ahead of expectations despite concerns surrounding the UK government’s wide-reaching railway network reforms.
The London-listed firm said on Tuesday that fees from the Department for Transport (DfT)’s contracted train operators had proved higher than previously forecast.
It has also seen “strong demand” for its open access offering, run by Lumo and Hull Trains.
Firstgroup acquired access rights for two new open access services over the half-year period and signed a £500m agreement to lease 14 new UK-manufacturered trains.
But it has repeatedly warned that the introduction of state-owned Great British Railways (GBR) may lead to a restriction in the growth of open access services.
In a submission to the DfT on Monday, it cautioned GBR may exhibit “adverse monopolistic” tendencies and argued the Office of Rail and Road (ORR) regulator, which decides on new routes, should be “empowered to adjudicate fairly and impartially with fair, transparent and open decision-making”.
Firstgroup boss Graham Sutherland said it had agreements in place to double the size of its open access operations “with potential to go much further”.
In a statement, the company said its overall balance sheet remained “strong” and it expects lower-than-expected net debts of £85 to £90m by the end of the year.
In First Bus, passenger numbers are forecast to grow around two per cent, with annual revenue in First Bus London expected to grow to between £300m and £350m.
It also expects to maintain its adjusted earnings per share in 2026.
“We have continued our strong financial and operational delivery in the second half of our financial year and have committed significant capital to further grow and diversify our portfolio,” Sutherland said.