Embargoed until 7:00am on Tuesday 2 October 2012
PRE-CLOSE TRADING UPDATE
FirstGroup plc ("the Group") reports the following update on trading for the
six months to 30 September 2012 ("the period") ahead of its half-yearly results
to be announced on 7 November 2012.
Despite continued economic uncertainty, overall trading for the Group during
the first half of the year is in line with our expectations. With a resolute
focus on creating a stronger business for the future we have taken action to
improve performance and deliver sustainable growth.
First Student has made good progress in addressing performance and
strengthening its operating model. Although there remains significant work to
be done, the business is now set on the path to recovery. We achieved a
retention rate of 90% and delivered a successful start up to the new school
year. US Dollar revenues on a like-for-like basis are expected to be down by
3.8 % for the period and as previously stated, we expect the operating margin
for the full year to exceed the 2010/11 performance.
First Transit continues to deliver a steady trading performance in line with
our expectations. US Dollar revenues are expected to increase by 3.2 % on a
like-for-like basis. We continue to achieve strong contract retention rates of
over 90% and progress a pipeline of new business opportunities.
We continue with the modernisation of Greyhound including the roll out of our
popular Express service. During the period like-for-like revenue growth is
expected to be 1.7% reflecting the impact of the sluggish economic environment
and lower fuel prices on summer trading. We have however, mitigated this impact
through the actions we have taken over recent years which has enabled us to
leverage the positive effects of a more flexible operating model. Our Greyhound
Express product continues to prove popular with customers and, having rolled
out services to Texas and California during the summer, we are developing plans
to extend to further new cities in the autumn.
Our UK Bus division is expected to deliver like-for-like passenger revenue
growth of 2.5% in the period. Challenging economic conditions continue to
impact a number of our urban operations however, during the period our
operations in the North of England and Scotland saw improved revenue growth
whereas, in keeping with industry trends, we saw a reduction in concessionary
volumes in our businesses in the South. We were delighted to successfully
complete the smooth delivery of our contract to provide spectator transport to
the London 2012 Games. While there remains considerable work to be done in our
UK Bus division, we have seen some early positive signs in some of our markets.
We have a clear direction and are executing a detailed plan to recover
performance and equip the business to achieve increased revenue and patronage
growth, including continuing to work through our programme of disposals. As
previously stated, we expect UK Bus operating margin to be approximately 8% in
the full year.
Our UK Rail division achieved a further period of solid performance with
like-for-like passenger revenue expected to increase by 8.1%. All of our rail
franchises made a strong contribution to this performance and we remain focused
on ensuring the quality of our existing operations while continuing to develop
opportunities from the re-franchising programme. We are shortlisted for all
three rail franchises currently out for tender.
On 15 August, the Department for Transport (DfT) announced that we have been
awarded the contract to operate the InterCity West Coast franchise. The
incumbent operator Virgin Rail Ltd, a joint venture between Virgin Group and
Stagecoach Group plc, is pursuing a legal challenge against the DfT in relation
to the franchise award. We have every confidence in the DfT's process which is
rigorous, detailed and fair and in which bids are thoroughly tested. Our focus
is to ensure a smooth transition with continuity for staff and passengers alike
and to deliver the many benefits and improvements we are offering without delay
or disruption. We continue to prepare for a successful mobilisation on 9
Commenting, Tim O'Toole, Chief Executive said:
"I am pleased to report overall trading for the first half of the year is in
line with our expectations. With a fundamentally strong and diverse portfolio
of operations we are focused on driving a greater performance and delivering
improved growth and returns. While there is significant work to do we are
satisfied with the progress of the actions we have taken, though we remain
mindful of the uncertain economic backdrop.
"We have leading positions in a sector that is a key enabler of economic growth
and we are confident that the actions we are taking will strengthen the
business for the future. Therefore, reflecting its longer term view, the Board
remains committed to its current policy of dividend growth of 7.0% through to
the end of the financial year 2012/13."
*For all businesses excluding UK Rail the results for the comparative period in
2011/12 included an extra week of trading.
A conference call for analysts and investors will be held at 9:00am today.
Please call +44 20 7291 0507 in advance of the call to register and to receive
Contacts FirstGroup plc:
Chris Surch, Group Finance Director
Rachael Borthwick, Group Corporate Communications Director
Tel: + 44 20 7291 0512
Michael Harrison/Andrew Porter
Tel: +44 20 7396 7406