15th Sep 2020 10:37
(Alliance News) - FirstGroup PLC on Tuesday said its trading has been stronger than expected with the bus operator adding that it is seeing more "clarity", despite the ongoing impact of Covid-19.
FirstGroup shares shot up 8.0% to 44.38 pence each in London on Tuesday morning.
The FTSE 250 firm said its financial performance was stronger than forecast. Adjusted operating profit and cash from operations ahead of internal expectations in the period between April 1 and August 31.
The company now expects a "small adjusted operating profit for the seasonally weaker first half of the financial year", ahead of its forecasts from earlier this summer. For the six months ended September 30, 2019, FirstGroup had posted adjusted operating profit of GBP97.7 million.
FirstGroup added that it is "resolutely focused" on selling some North American units and noted it has already seen "significant interest from potential buyers".
Earlier in September, the Daily Telegraph newspaper had reported that a group of private equity firms could be lining up bids for the transport firm's US operations.
The Telegraph reported on Saturday that Canary Wharf owner Brookfield, Apollo Global Management and KKR were among a slew of potential suitors for school bus service provider FirstStudent and fixed route bus services provider FirstTransit.
In the US, the company said some states have seen increases in Covid-19 infections, "resulting in changes to local guidance and differing views about the most appropriate ways to return to pre-pandemic activities".
First Student has been hit by many school districts delaying the start of in-person teaching. FirstGroup noted it has taken on added business "from struggling smaller competitors".
FirstGroup also operates the First Transit and Greyhound bus services, which also have presence in Canada as well as the US. First Transit's revenue hit was not as severe as other units because many of its contracts are deemed essential services. Greyhound's revenue has improved to roughly 35% of pre-pandemic levels.
In the UK, its First Bus arm has seen an "encouraging" bounce in trading, with passenger volumes recovering.
While at First Rail, which operates four UK rail franchises, operations are increasing but still lumbered at about 30% of pre-virus levels.
"Although the ongoing impact of the pandemic on the group continues to evolve, clarity is improving over time. We continue to take all necessary action to protect the business and to ensure the group is in the most robust position possible to deliver on our strategic plans," Chief Executive Matthew Gregory said.
By Eric Cunha; [email protected]
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