A weak UK bus business and a switch to a less lucrative extension on its TransPennine rail franchise hammered half-year profits at FirstGroup (FGP). But it's the uncertainty surrounding the West Coast franchise and future rail tendering that has really put a spanner in the works and meant no increase in the half-year dividend. That puts management's promise to grow the payout by 7 per a year at risk and increases the chance of a big cut next year. We'll have to wait until May to find out.
Many of First's divisional numbers were flagged last month. However, even in the absence of last year's £73m pension benefit, the bottom line looked ugly - made worse by this year's £12.3m of rail bid costs and further £9.2m spent settling a contract dispute at Transit and shutting bus depots. Even after stripping out one-off items, pre-tax profit still tumbled 42 per cent to £48.7m. True, First will get back the money spent on its West Coast bid, but it still has no idea how much. Operating profit fell by a third at UK bus to £39.6m as First pulled in less concessionary revenue in the south, while selling £100m of unwanted bus depots is proving slow going. In North America, improvements at Greyhound and the Transit business lifted dollar profits by 6 per cent.
Investec Securities expects adjusted pre-tax profit of £185.5m in 2013, giving adjusted EPS of 29.3p (from £271.4m and 39.8p in 2012).
FIRSTGROUP (FGP) | ||||
---|---|---|---|---|
ORD PRICE: | 196p | MARKET VALUE: | £944.5m | |
TOUCH: | 196-197p | 12-MONTH HIGH: | 350p | Low: 184p |
DIVIDEND YIELD: | 12.1% | PE RATIO: | 8 | |
NET ASSET VALUE: | 148p* | NET DEBT: | 284% |
Half-year to 30 Sep | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
---|---|---|---|---|
2011 | 3.17 | 128 | 18.3 | 7.62 |
2012 | 3.25 | 8.40 | 1.70 | 7.62 |
% change | +3 | -93 | -91 | - |
Ex-div: 9 Jan Payment: 7 Feb *Includes intangible assets of £1.89bn, or 392p a share |