Industry-wide market conditions continue to be challenging for First, with mixed Christmas high street trading and ongoing congestion issues in several areas. Like-for-like passenger revenues decreased by 0.6% in Q3, a “modest improvement” on the first half, says First. It “continues to focus on cost efficiencies including ongoing depot consolidation to improve margins, while investing in smarter ticketing and real-time passenger information.”
It in third-quarter trading update, FirstGroup says the trend of overall trading and expectations for the full year are unchanged.
Group revenue increased by 12.8% in the third quarter, benefiting from favourable currency exchange rates. Group revenue in constant currency was flat, with growth in North America offset by rail franchise changes and First Bus’ trading.
Says FirstGroup Chief Executive Tim O'Toole: "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. We remain focused on disciplined execution to deliver significantly increased cash generation for the full year.
“In First Student we continue to benefit from our ongoing pricing strategy, aiming to generate appropriate returns from a more focused book of contracts. Although the strong US employment market continued to cause driver shortages in some areas, we have responded with improved recruitment processes and marketing. With solid execution since the successful school start-up, we are well positioned to achieve our targeted margin progression for the year.
“First Transit’s revenue performance in the third quarter benefited from organic growth and the commencement of new business, including the successful mobilisation of our first US commuter rail contract in Denton, Texas. In the period First Transit continued actions to recover the cost increases incurred in certain contracts in the first half.
“Improving Greyhound (USA) volumes resulted in like-for-like revenue growth of 1.2% in the third quarter, benefiting from higher fuel prices than the comparable period last year and the continued development of our algorithmic pricing and yield management systems.
“In First Rail third quarter like-for-like passenger revenue growth of 1.1% continued to reflect the moderating growth rates seen across the industry. The impact of the slowdown for GWR has been exacerbated by the volume of infrastructure upgrade work taking place on the network; TPE revenue performance continues to be above the industry average year to date.
“We 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.
“We were delighted that Hull Trains was named Rail Operator of the Year at the recent National Transport Awards. We recently announced the formation of two joint ventures with Trenitalia UK to participate in the East Midlands and West Coast Partnership rail franchise competitions.
“In the third quarter the Group repaid $50m of private placement notes from cash balances.”
The Group is scheduled to announce results for the year to 31 March 2017 on Thursday 1 June 2017.
