FirstGroup upbeat despite revenue fall
Transport firm FirstGroup has said it expects to make "strong progress" despite seeing revenues fall following the loss of key rail franchises.
The Aberdeen-based group reported a 13.8% drop in revenues for the year to 31 March, with underlying earnings slipping by 1% to £300.7m.
Its First Student school bus division in the US was also affected by the timing of the school calendar.
Underlying pre-tax profit edged 2.7% higher to £168.3m.
FirstGroup issued a profits warning in January, with poor weather and extreme flooding across Cumbria and the north of England at the end of last year compounding already difficult trading.
Its rail arm, which operates the Great Western Railway and First TransPennine Express franchises, also suffered a drop-off in demand from passengers following recent terrorist attacks in Paris and Brussels.
Despite this, it said passenger numbers rose by 2.9% on a like-for-like basis in its First Rail business overall across the year.
Rail revenues tumbled to £1.3bn from £2.2bn the previous year, reflecting the loss of rail franchises over the past few years, such as the East Coast Line and ScotRail.
The firm added it was planning to make further savings in its First Bus arm, which runs a fleet of about 6,300 buses. It has already slashed costs by more than £20m in the past financial year, closing depots as part of cost-cutting efforts.
But it won a seven-year contract in December to continue running the TransPennine Express train line, and it has been shortlisted for the East Anglia franchise.
Chief executive Tim O'Toole said the group was on track for a "significant" increase in net cash generation for the first time since launching an overhaul three years ago.
He said: "In the coming year we expect the group to make strong progress despite a challenging trading environment in several of our markets.
"This will come from our ongoing focus on disciplined contract bidding and our cost efficiency programmes, as well as lower fuel costs and a higher number of First Student operating days compared with the prior year."