FirstGroup profits rise after 'price changes' offset rising costs
The operator of London's red buses and Avanti West Coast posted an adjusted operating profit of just under £223million for the 12 Months to the end of March, beating analyst forecast of around £220million.
A bumper performance from both First Rail and First Bus operations came despite cost inflation of 3.5 per cent, largely driven by 5 per cent average diver pay hikes.
FirstGroup said this was 'offset by pricing changes' of around £41million and 'network and operational efficiencies' that resulted in roughly £10million of savings.
It added: 'In line with our focus on staggered, multi-year pay award settlements, c.16 per cent of our driver pay awards for FY 2026 were previously agreed, at an average increase of c.3 per cent, and we have commenced negotiations for pay awards due in FY 2026.'
The firm extended its share buyback program by £50million, following £92million in payouts in the latest financial year, and upped its dividend from 5.5p to 6.5p.
Firstgroup shares rose 6.3 per cent or 12.20p to 206.00p on Tuesday, having risen over 21 per cent in the last year.
The firm's First Rail business, which also hosts Hull Trains and GWR on its stable of brands, posted a better than expected adjusted operating profit of £148.8million.
South Western Rail, previously owned by FirstGroup as a joint venture with MTR, became the first operator to return to public ownership in late May as part of the Government's renationalisation drive.
SWR contributed revenue of around £1.18billion and adjusted operating profit of £25.2million to FirstGroup last year.
The division's two open access operations, Hull Trains and Lumo, delivered revenue of £106.4million, up from £99.8million the previous year.
FirstGroup said: 'This was driven by strong demand, effective yield management, additional ten car services on Hull Trains and continued high levels of customer satisfaction, partially offset by slightly higher costs.;
Across all its operations, the company's adjusted revenue rose 7 per cent year-on-year, to £1.37billion with its bus arm proving the main driver of growth.
Chief executive Graham Sutherland said: 'We have further strengthened our businesses and continued to deliver against our strategy, including growing and diversifying our earnings in both First Bus and First Rail.
'This leaves us well placed to at least maintain our adjusted earnings per share in FY 2026, from a stronger base, as we continue to successfully navigate a period of transition in bus and rail in the UK.'
Earlier this month FirstGroup said said it had secured a deal with rolling stock company Eversholt Rail in relation to its planned new route between London Euston and the city of Stirling in Scotland.
Launching in mid-2026, the services will also call at Milton Keynes Central, Nuneaton, Crewe, Preston, Carlisle, Lockerbie, Motherwell, Whifflet, Greenfaulds and Larbert.
There will be four return services a day, but three on Sundays, on the full route, with an additional daily return service between Euston and Preston.
This will provide more competition for several operators such as LNER and Avanti West Coast.
FirstGroup holds track access rights from regulator the Office of Rail and Road for the route on the West Coast Main Line until 2030.
Panmure Liberum analysts rated Firstgroup a 'Buy', with a target price of 250p.
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