First Group warns on profits after UK floods and US passenger decline

Emergency: The north England and Scotland were hit by severe flooding over Christmas

Owen Humphreys/PA

28 January 2016

Transport firm FirstGroup warned on profits after a grim third quarter in which floods and bad weather in parts of the UK led to a severely depleted number of passengers on its buses.

First also saw some slowing in customer growth on its trains in the weeks after the Paris terrorist attacks and has seen use of its Greyhound bus services in the US drop sharply, as falling oil prices made driving cheaper.

In the US, an acute shortage of drivers had hurt its First Student yellow school buses operation.

In the UK, lower High Street footfall and the impact of flooding in some markets left bus revenues flat.

Shares in the company fell 5.5p or 5% to 96.8p.

Chief executive Tim O’Toole said the issues would moderate the company’s performance but were not severe enough to materially affect the group’s transformation plans.

“We expect to deliver significantly improved cash generation in our next financial year as planned,” O’Toole said.

First has had a difficult few years after losing a string of rail franchises — including the Thameslink routes and ScotRail which it had run for many years.

In December it ended its losing streak with a seven-year contract to run the TransPennine Express line as sole operator from April.

A US activist shareholder, Sandell Asset Management, has also been putting the company under pressure to sell its US assets.

Overall group revenues sank 9.5%, largely reflecting the changes to rail franchises and the timing of the school year in America.

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First Group warns on profits after UK floods and US passenger decline

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