Aberdeen-based FirstGroup says it is on track to meet its full-year targets, expecting strong growth in its rail division.
Subscribe to our daily newsletter
Why? Free to subscribe, no paywall, daily business news digest.
The group says overall trading in the three months to 31 March 2015 was in line with expectations, as it continues to progress its future plans.
In 2013, the company was forced into a £615million rights issue, and last year also saw its rail portfolio shrink from five contracts to two, including the loss of the £2.5billion ScotRail franchise to Dutch group Abellio.
However in March it announced it had secured a contract to operate the Great Western rail network until 2019, with a possible extension of a further 12 months. It has also signed an agreement to run the TransPennine Express for an additional year at the start of the next competitive franchise, expected in April 2016.
FirstGroup says strong demand continues to drive passenger volume and revenue growth, and like-for-like passenger revenue is expected to increase by 6.6% for the year, at the “top end” of the company’s expectations.
Similarly, like-for-like passenger volume growth for the its UK bus transformation programme is predicted to grow by 1.1, commercial passenger volume growing by 2.6% and like-for-like revenue growth up 2.3%.
It also expects US Dollar revenue in its First Student service to be 1.3% higher for the year, and like-for-like revenues for Greyhound, its US intercity bus service, expected to be flat. The company says this is partly due to lower fuel prices having an adverse effect on passenger numbers, by making other forms of transport more affordable.
FirstGroup chief executive Tim O’Toole said: “Overall trading for the year is in line with our expectations and we continue to make progress with our multi-year transformation plans, which will improve the Group’s financial performance and ensure we deliver sustainable value creation in the medium term.
“In UK Bus we continue to deliver passenger volume growth, positive yield and further cost efficiencies. Greyhound has flexed mileage, timetables and pricing in response to the rapid reduction in passenger demand from lower fuel prices and is on track with the yield management programme, while our First Transit and UK Rail businesses have maintained the good growth momentum and margins achieved throughout the year.
“In recent weeks we were delighted to secure a contract to operate the Great Western franchise for up to four and a half years, and will continue to work closely with the Department for Transport and Network Rail to deliver the £7.5bn Great Western Mainline modernisation programme.
“We have also signed an agreement to run the TransPennine Express franchise through to 1 April 2016, and look forward to submitting our bid for the new franchise later in the spring.”