FirstGroup hikes profit outlook after strong summer of travel

Transport giant FirstGroup has said it expects to make a higher yearly profit than previously thought after being boosted by a strong summer of travel.

The bus and rail firm reported an increase in the number of passengers travelling with First Bus, which is one of the UK’s biggest regional bus operators carrying around 1 million people a day.

Trading was slightly ahead of expectations during the first half of the financial year despite ongoing cost-of-living pressures, the company said.

More leisure travel over the summer period also fuelled demand for its open access train operators, like Lumo and Hull Trains, which do not receive subsidies from the Government and compete with services running on the same railway lines.

Furthermore, the group told investors that payments from agreed contracts with the Department for Transport are due to give profits a boost.

Adjusted operating profit for the First Rail division – which also runs Avanti West Coast, Great Western Railway and South Western Railway – is therefore expected to be between £12 million and £15 million ahead of expectations.

Across the group, the adjusted operating profit is forecast to be between £14 million and £20 million higher than previous guidance, the company said.

FirstGroup saw its TransPennine Express franchise taken over by the Government at the end of May, which the firm said was a “huge disappointment” after taking steps to improve the service.

The franchise contributed  £8.5 million in the last financial year to the group’s rail division income.

The Aberdeen-headquartered group said earlier this year that the Covid pandemic and ongoing industrial action had led to three of the most challenging years “in the history of the UK’s rail industry”.

Graham Sutherland, FirstGroup’s chief executive, said: “Over the last few months, we have successfully built on the strong financial performance we reported at our full-year results in June.

“Our updated outlook for the 2024 financial year reflects a strong performance in our First Rail division, which is testament to the hard work and capabilities of our teams.

“In First Bus, we are delivering sustainable revenue growth as passenger volumes increase and we continue to benefit from the actions we have taken to transform the business.”

Shares in FirstGroup were up by 4% on Wednesday morning.