FirstGroup's results pointed to some signs of stabilisation in the transport market, particularly among London commuters, but growth is at best sluggish in most of its main markets, with increased fuel hedging costs and lower margins a consequence of the current economic turmoil.
More than half of sales originate in America, where its businesses include the First Student school bus franchise. Contracted services were weaker at $1.65bn (£1.05bn) compared with $1.73bn last time, although operating profit in this division was up from $84m to $89m because of cost reductions. The Greyhound bus franchise is still proving problematic, though, with sales falling by 20 per cent to $494m. The UK bus and rail divisions fared slightly better. Buses recorded like-for-like sales growth of 2.4 per cent, despite marginally lower passenger volumes. First Great Western trains reported a marginal improvement in operating profit, from £48 to £51m, as an increased government subsidy offset higher costs.
Overall, group margin fell from 6.5 per cent to 5.7 per cent as the company also booked increased fuel hedge costs of £100m, although chief executive Sir Moir Lockhead did say that the company would offset this with £200m of cost reductions this year and recover fuel hedge costs in 2010/11.
Broker KBC Peel Hunt forecasts pre-tax profits of £272m for 2010, with EPS of 39.7p (£326m and 48.3p in 2009.)
FIRSTGROUP (FGP) | ||||
|---|---|---|---|---|
| ORD PRICE: | 377p | MARKET VALUE: | £1.81bn | |
| TOUCH: | 377-378p | 12-MONTH HIGH: | 494p | LOW: 193p |
| DIVIDEND YIELD: | 5.1% | PE RATIO: | 13 | |
| NET ASSET VALUE: | 136p* | NET DEBT: | 350% | |
| Half-year to 30 Sep | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 2.77 | 54.4 | 5.00 | 6.05 |
| 2009 | 2.90 | 30.3 | 3.90 | 6.65 |
| % change | +5 | -44 | -22 | +10 |
Ex-div: 6 Jan Payment: 3 Feb *Includes intangible assets of £1.66bn or 346p a share | ||||
