Tim O’Toole said this set of FirstGroup (FGP) results “clears the way for the new approach”, apt given full-year numbers came alongside the announcement of his departure as chief executive "with immediate effect". The transport group reversed into negative earnings largely due to a £277m non-cash impairment of goodwill on the Greyhound business, together with projected losses of up to £106m on the TransPennine Express (TPE) rail franchise. Plans to increase capacity by 80 per cent on TPE are still going ahead, even though the franchise is loss-making.
This “new approach” will first be felt on the Greyhound coach business with a full external review of its business model. This will focus on how it can compete with the low-cost airlines that have become a favoured mode of travel over time-consuming, long-haul coach trips. Shorter journeys have held up better, but it was not enough to compensate for the decline in long haul, leading to a 40 per cent fall in operating profit to £25.5m and 2.5 per cent margin contraction to 3.7 per cent. The rail business saw 1.4 per cent like-for-like passenger growth, but management said a “slower rate of overall industry growth currently prevails”.
Analysts at Liberum expect adjusted pre-tax profit of £233m in the year to March 2019, giving EPS of 14p, increasing to £270m and 16.1p in FY2020.
| FIRSTGROUP (FGP) | ||||
| ORD PRICE: | 95.8p | MARKET VALUE: | £1.16bn | |
| TOUCH: | 95.6-95.8p | 12-MONTH HIGH: | 153p | LOW: 76p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 122p* | NET DEBT: | 72% | |
| Year to 31 Mar | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2014 | 6.72 | 59 | 5.1 | nil |
| 2015 | 6.05 | 106 | 6.2 | nil |
| 2016 | 5.22 | 114 | 7.5 | nil |
| 2017 | 5.65 | 153 | 9.3 | nil |
| 2018 | 6.40 | -327 | -24.6 | nil |
| % change | +13 | - | - | - |
| Ex-div: | na | |||
| Payment: | na | |||
| *Includes intangible assets of £1.59bn, or 131p a share | ||||
