FirstGroup sees its shares slideBy Graeme Evans
January 21, 2009
Shares in FirstGroup slid after the firm’s Greyhound bus arm suffered a poor festive season and growth rates in UK rail showed signs of strain.
The firm reported disappointing demand in North America over the Thanksgiving and Christmas holidays, resulting in Greyhound’s like-for-like revenues falling 4.5 per cent in the period between the start of October and December 31.
FirstGroup also admitted that growth rates in its UK rail division were being impacted by the weakening economy, particularly in Central London.
Despite the warning like-for-like revenues for the division, which operates franchises including First Great Western and First ScotRail, were up 7.2 per cent.
FirstGroup said its UK bus division increased revenues by 7.6 per cent as passengers opted for cheap travel alternatives.
While the company said it was well placed to withstand the economic downturn, shares in the FTSE 100 Index fell by around 11 per cent.
FirstGroup said it had already taken action to reduce Greyhound services in line with demand, while it will also look for efficiency improvements.
In the UK rail arm, FirstGroup said it was not reliant on any one specific market, with a mixture of two high subsidy railways in Scotland and the North of England as well as a commuter and intercity franchise in the South.
The company added: “The group remains highly profitable, cash generative and resilient despite the increasingly uncertain economic outlook.”
FirstGroup also runs First Capital Connect, First TransPennineExpress, Hull Trains and freight firm First GBRf.
The company is the UK’s largest bus operator, with approximately 9,000 buses operating in 40 towns and cities across the UK, carrying three million passengers every day.
Shore Capital stockbrokers said: “We feel there are still positives to take from the update. UK bus continues to perform well and our preference for operators with large bus operations such as Stagecoach and Go-Ahead stands.”