Transport operator FirstGroup has celebrated a sharp jump in profits thanks to rebounding traveller numbers and improving margins across its rail and bus operations.
At 169.7p per share, FirstGroup shares were basically unchanged in Tuesday trading.
Revenues at the rail and bus company slipped fractionally to £4.7 billion in the 12 months to March. However, adjusted operating profit rocketed 26.9% to £204.3 million.
FirstGroup attributed this to an “extra week of trading and receipt of higher than accrued variable fees in First Rail [the year before].”
Meanwhile, the transport operator booked a pre-tax loss of £24.4 million from a £128.7 million profit a year before. This was due to non-cash charges of £146.9 million following its withdrawal from two local government pension schemes.
Journeys Rise
FirstGroup recorded 274 million rail journeys last year, up from 263 million during financial 2023. Daily bus journeys increased to 1.14 million from 1.07 million over the same period
The group’s adjusted operating margin rose to 4.3% from 3.2% the year before thanks to a significant pickup at FirstBus.
Margins here improved to 8.3% from 6.5% in financial 2023, FirstGroup said. It noted that “increased passenger volumes, improved driver availability and data-led operational and commercial improvements” all offset ongoing inflationary pressures and weaker government funding.
The company ended financial 2024 with adjusted net cash of £64.1 million. This was down from £109.9 million a year earlier.
Despite this decline, FirstGroup raised the full-year dividend to 5.5p per share, up 45% year on year.
The business repurchased £118 million of its shares over the course of financial 2024, it said.
“Considerable Progress”
Chief executive Graham Sutherland said that “we have made considerable progress in our financial and operational performance… as we continue to transform and grow our leading First Bus and First Rail businesses. This is testament to the resilience and capability of our people across the group and leaves us well positioned to grow and create further value for all our stakeholders.”
He added that “our focus remains on working with government and all our stakeholders to deliver for our customers and drive modal shift. We will continue to lead in environmental and social sustainability, including building out our adjacent electrification opportunities in First Bus, and investing to grow and diversify our portfolio to ensure our business remains profitable and resilient in the long-term.”
The firm said it expects First Bus’ adjusted operating profit margin to hit 10% during the first half of the current year, driven by further productivity improvements and lower costs as the company electrifies its fleet.
“Good Reading”
Analyst Adam Vettese of eToro commented that “FirstGroup has pulled up with a set of results that make for good reading, with a jump in year-on-year operating profit and margins. This is somewhat of a surprise given that the past year has been dominated by strikes and unreliable service, notably on FirstGroup’s own Avanti West Coast service.”
He added that “if the firm continues to achieve growth in line with what they have set out then investors will want to see a continuation of the strong post pandemic performance of the share price and to push on towards those legacy highs, back above the 200p mark.”
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