FirstGroup boosts FY 2024 profit forecast on strong rail and bus demand

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FirstGroup boosts FY 2024 profit forecast on strong rail and bus demand
Credit: © Reuters.

UK transport firm, FirstGroup Plc, has raised its fiscal 2024 earnings guidance, anticipating greater profits than previously expected. The Aberdeen-based company, led by CEO Graham Sutherland, predicts an additional £14 million-£20 million in adjusted operating profits and £7 million-£10 million in adjusted attributable profits.

This increase in expected profits is driven by robust demand for its rail and bus services, particularly during summer leisure trips. Passenger counts on Lumo and Hull Trains have surpassed expectations, contributing to the company's optimistic outlook. The First Rail division, which operates Great Western Railway and South Western Railway among others, foresees its full-year adjusted operating profit exceeding expectations by £12 million-£15 million.

The First Bus division, which transports over one million passengers daily, has also recorded sustainable revenue growth. Despite inflationary hurdles, it slightly outperformed the first half-year predictions due to high passenger volumes and productivity enhancements initiated by management. By transitioning First Bus employees to a new pension scheme, the company anticipates annual savings of £2 million -£3 million (GBP1 = USD1.2290).

Despite losing the TransPennine Express franchise due to delays, the UK Government renewed Avanti West Coast's nine-year contract which is 70% owned by FirstGroup. This renewal occurred despite Avanti's poor punctuality record. Following this news, FirstGroup shares rose by 4.2%, marking a 36% growth over the past year and ranking them second on the FTSE 250 Index .

CEO Graham Sutherland attributes this upbeat forecast to the team's diligent efforts and strategic management actions transforming the business. The company is slated to disclose its interim results on November 23.

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