Transport operator FirstGroup reported a significant increase in profits due to rising traveller numbers and improving margins in both its rail and bus operations. Despite a slight decrease in revenues to £4.7 billion, adjusted operating profit soared by 26.9% to £204.3 million in the 12 months to March. This increase was attributed to an extra week of trading and higher variable fees in the previous year.
The company recorded 274 million rail journeys and 1.14 million daily bus journeys last year, showing an increase from the previous year. The adjusted operating margin also rose to 4.3% from 3.2% the year before, with FirstBus experiencing a significant improvement in margins to 8.3%. FirstGroup noted that higher passenger volumes, improved driver availability, and operational and commercial enhancements helped offset inflationary pressures and reduced government funding.
Despite a pre-tax loss of £24.4 million due to non-cash charges following its withdrawal from pension schemes, FirstGroup ended financial 2024 with adjusted net cash of £64.1 million. The company also raised its full-year dividend to 5.5p per share, marking a 45% increase from the previous year. Additionally, FirstGroup repurchased £118 million of its shares during the fiscal year.
FirstGroup’s chief executive, Graham Sutherland, highlighted the company’s progress in financial and operational performance, attributing it to the dedication and capability of its employees. He emphasized the company’s commitment to growth and creating value for stakeholders while focusing on environmental and social sustainability. Sutherland expressed optimism about First Bus’ prospects, expecting its adjusted operating profit margin to reach 10% in the first half of the current year through productivity enhancements and cost reductions from fleet electrification.
Analyst Adam Vettese from eToro praised FirstGroup’s positive financial results, noting the improved operating profit and margins year-on-year. Despite challenges such as strikes and service disruptions, Vettese highlighted the potential for continued growth and a positive trajectory for the company’s share price. Investors are optimistic about FirstGroup’s ability to sustain its post-pandemic performance and potentially surpass previous highs above the 200p mark.
