FirstGroup says its results will be in line with expectations despite losing its TransPennine Express franchise and the impact of ongoing strike action.
The transport giant was stripped of the TransPennine franchise last month – a decision it called a “huge disappointment” - while strikes across the UK rail network are ongoing.
Despite that, it today said it expects “broadly consistent” earnings from its trains business in the year to next March and for its group results to be in line with expectations, though it said the “economic and industrial relations backdrop remains challenging”.
FirstGroup owns the Avanti West Coast, Great Western Railway (GWR) and South Western Railway (SWR) franchises as well as two open access passenger rail services, Hull Trains and Lumo. It also operates the London Trams service on behalf of Transport for London.
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The pandemic and ongoing industrial action hit the rail sector hard and FirstGroup said the last few years have been “among the most challenging in the history of the UK’s rail industry”.
TransPennine Express contributed £8.5m in the last financial year to the group’s rail division income.
FirstGroup’s full-year results showed statutory pre-tax profits falling sharply to £128.7m from £654.1m in the year to March 25 due to the sale of its First Student, First Transit and Greyhound businesses.
With that impact stripped out, underlying earnings more than doubled to £82.1m from £36.2m the previous year, which it said was ahead of expectations.
FirstGroup launched a plan to buy back £115m of shares after offloading businesses in North America, helping the stock leap more than 13% higher in morning trading on Thursday.
Its results were boosted by rising demand, with a Government scheme to cap bus fares at £2 helping boost passenger numbers following pandemic disruption.
FirstGroup said its bus business saw revenues surge to £902.5m from £789.9m the year before as total passenger numbers jumped by a fifth thanks to recovering demand for public transport. Underlying earnings in the bus arm rose to £58.4m from £45.2m the previous year.
Its First Rail division – which runs around a quarter of the UK rail market – saw underlying earnings leap to £124.8m from £87.8m as passengers also returned to railways.
Chief executive Graham Sutherland said: “The past three years have been among the most challenging in the history of the UK’s rail industry, with it adapting to post-pandemic travel patterns and continued industrial action which has caused significant disruption for rail passengers and businesses across the country.
“We welcomed the recent position articulated by the Secretary of State highlighting that going forward, there will be an enhanced role for the private sector, to reinvigorate the rail industry, drive innovation and attract more customers to the railway.”
On the decision to nationalise the TransPennine Express franchise, he said: “The loss of the contract was a huge disappointment for our team which has worked extremely hard to improve services and to successfully recruit and train more drivers than ever before.”
“The decision has not altered our belief in the important role of private rail operators in the delivery of vital, environmentally friendly transport for customers and communities across the UK,” he added.
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