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Strong trading in North America helped shares in FirstGroup to climb almost 4 per cent on Tuesday morning, despite the company providing further evidence of a slowdown in UK public transport
In a trading statement for the third quarter of its financial year, First said UK rail revenues grew by only 1.1 per cent year-on-year in the October to December quarter, while bus revenues declined by 0.6 per cent.
First’s account squared with the picture painted by Stagecoach, National Express and other UK public transport operators in recent months. Most have blamed a combination of political and economic uncertainty and real-terms declines in the cost of motoring, which has shifted journeys to cars and increased congestion for buses.
First nevertheless said expectations for the full year to March 31 remained unchanged. The overall picture was made rosier by trading in the group’s North American operations.
Stripping out the effect of the dollar’s strength, like-for-like revenue at First Transit, which runs public transport services for US municipalities on contract, was up 5.5 per cent year-on-year for the quarter, while revenues at FirstStudent, the school bus operator, rose 1 per cent on the same basis. At Greyhound, the long-distance bus operation, revenues were up 1.2 per cent. Unadjusted for currency changes, North American revenues were up 12.8 per cent.
At publication time, shares in the group were up 3.8 per cent, to 108p.
Tim O’Toole, chief executive, said overall trading continued to support the group’s expectation of “good progress” for the current year.
Our substantial North American operations are delivering encouraging performances and are benefiting from currency tailwinds, but we continue to experience tough trading conditions for our First Bus and First Rail operations in what remains an uncertain UK macroeconomic environment.
First said the modest growth in UK rail reflected the “moderating growth rates” being experienced across the industry. In Great Western, the operator’s principal UK rail franchise, the effect had been exacerbated by the volume of infrastructure work being undertaken during the route’s electrification.
The group blamed the decline in UK bus on “mixed” Christmas trading on high streets, the uncertain economic environment and congestion in some markets.