FirstGroup sees wheels come off in US

A sign of the times for Barack Obama? The British owner of US Greyhound buses has seen profits slump...

Last Updated: 31 Aug 2010

FirstGroup, the British transport company that gets 2.5bn people from A to B every year, saw profits slide 24% to £54m in the six months to September thanks to its latest acquisitions in the US. The group, which already operates the iconic Greyhound bus service, has just bought a US bus operator called Laidlaw, which runs the yellow school buses you always see on TV – and the one-off costs of the deal pushed profits down. On the other hand, revenues were up as more people opted for public transport – showing that high fuel prices are not necessarily bad news for everyone…

You might not know an awful lot about FirstGroup, but you’ll be familiar with their operations: its four UK rail franchises include First Capital Connect and First Great Western, and it runs more than 20% of all our buses. And it was delighted to report today that more of us are leaving the car at home and taking public transport instead: rail passenger revenue was up nearly 10%, thanks to a 6% growth in passenger numbers, while bus revenues were up nearly 8% (on a 2% increase in passenger volumes). ‘We are encouraged by the growing number of people switching to public transport from other modes of travel,’ beamed CEO Sir Moir Lockhead.

Overall, revenues increased to £2.8bn, a more-than-healthy 57% jump. Of course as you might guess from the fact that revenue rises are outstripping passenger increases, this is partly because it’s been increasing its fares – not something it’s shouting about in today’s results, although it will argue this is fair reward for its improved service quality and operating performance. Either way, this enabled it to boost profit margins, despite the fact that it was paying more money for its vehicle fuel than at any other time in its history.

Over in the US, the ongoing integration of Laidlaw (which FirstGroup bought 12 months ago) did take a sizeable bite out of its bottom line – although Lockhead insisted that ‘excellent progress’ had been made, and cost savings are apparently ahead of schedule. And Greyhound also seems to be performing pretty well, with revenues up 5% and ‘On Time Performance’ (i.e. not being late) up 10%. ‘We have delivered a step change in the performance of the business,’ boasted Lockhead. In recent years, the business been more like a fat Labrador with a dodgy hip than a Greyhound.

So hopefully its US operations will stop being a drag on figures before too long. And as times get tougher on both sides of the Atlantic, there’ll no shortage of drivers opting to take the bus instead...

In today's bulletin:
Barack Obama sweeps to power - now for the hard bit
Next takes another beating
FirstGroup sees wheels come off in US
MT's Little Ray of Sunshine: A canis canem edit world
Why extra training can save you money

Find this article useful?

Get more great articles like this in your inbox every lunchtime

Mike Ashley: Does it matter if the public hates you right now?

The Sports Direct founder’s response to the COVID-19 pandemic has drawn criticism, but in the...

4 films to keep you sane during the coronavirus lockdown

Cirrus CEO Simon Hayward shares some choices to put things in perspective.

Pandemic ends public love affair with Richard Branson et al

Opinion: The larger-than-life corporate mavericks who rose to prominence in the 80s and 90s suddenly...

The Squiggly Career: How to be a chief strengths spotter

When leading remotely, it's more important than ever to make sure your people spend their...

"Blind CVs don't improve your access to talent"

Opinion: If you want to hire socially mobile go-getters, you need to know the context...

The highs and lows of being a super-achiever

Pay it Forward podcast: techUK boss Jacqueline de Rojas and Google UK's marketing strategy and...