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Croydon tram crash overshadows FirstGroup performance

The US business showed its muscle while trading conditions in the UK remain tough
November 15, 2016

Seven deaths and dozens of injuries as a result of the Croydon tram crash earlier this month understandably set a sombre tone for these FirstGroup (FGP) results. The group could not comment further than to say it was providing its full support to the investigation and to those affected. It's difficult, at this stage, to quantify any financial impact.

IC TIP: Buy at 112.5p

In terms of the wider business, its US operations pulled their weight, with its First Student schools business securing a 7.3 per cent average price increase for its contracts. Its First Transit business also registered 3.2 per cent growth in sales on a constant-currency basis, despite a drag from the Canadian oil sands region.

In the UK, it's still tough. The renewal of its Trans-Pennine Express franchise earlier this year brought with it new operating terms, which means, according to chief financial officer Matthew Gregory, adjusted operating profit margins for the First Rail division are now closer to 3 per cent than the 5-6 per cent in the prior financial year. And passenger numbers continued to fall in its bus business as high-street footfall trends continue their downward march.

Prior to these results, analysts at Investec expected pre-tax profit of £192.5m for the year to March 2017, leading to EPS of 12p, compared with £168.3m and 10.3p in FY2016.

FIRSTGROUP (FGP)
ORD PRICE:112.5 MARKET VALUE:£1.36bn
TOUCH:112.4-112.7p12-MONTH HIGH:116pLOW: 80p
DIVIDEND YIELD:nilPE RATIO:13
NET ASSET VALUE:138p*NET DEBT:89%

Half-year to 30 SepTurnover (£bn)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20152.44-7.5-0.4nil
20162.5611.10.7nil
% change+5---

Ex-div:na

Payment:na

*Includes intangible assets of £2.04bn, or 170p a share