FirstGroup's annual profits rise as improvement plan delivers
Transport operator First Group saw annual profits rise in 2014, as its improvement plan delivered higher margins in its US and UK bus divisions.
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For the year to 31 March, the FTSE 250 group reported profit before tax of £163.9m, a 46.5% increase year-on-year and in line with analysts’ expectations, while revenue declined 10% to £6.05bn.
The decline in revenue was attributed to bad weather conditions in the US, which hit the group’s Greyhound bus operations, while the company lost the First ScotRail and First Capital Connect UK rail franchises.
However, the group was confident of offsetting the loss of the two franchises.
“We currently anticipate strong progression in our non-rail businesses, driven mainly by the ongoing turnarounds of First Student and UK Bus, to largely offset the substantially lower contribution from UK Rail,” said group chief executive Tom O’Toole.
Last year, the FTSE 250 group unveiled plans to improve its underperforming business, as they dismissed demands by activist shareholder Sandell Asset Management to spin off its US operations and O’Toole admitted there was a lot work still to be done.
“Our improved financial performance this year demonstrates that our multi-year transformation programme is making progress, though we must maintain the momentum of change to meet our medium term financial targets,” he said.
Meanwhile, the company has announced that Chris Surch, its finance director, will retire on 8 January and a process to individuate a replacement is already underway.
First Group shares were up 0.84% to 120.31p at 08:46.