FirstGroup drives cost savings

FirstGroup said it was “advancing cost efficiency plans” for the bus division including “a number of changes to our depot portfolio” as it targets higher profit margins.

It has recently shut depots in Bracknell and Hereford, merged depots in the Potteries and is selling one in south Devon.

The Aberdeen-based group said in a trading update for the first quarter since April 1 that like-for-like bus takings had grown by 1.4 per cent.

Commercial passenger revenue continued to grow by more than two per cent, but this had been offset by a fall in turnover related to passengers entitled to reduced fares.

The transport group is paid by local authorities - under pressure from squeezed government funding - to subsidise these reductions.

FirstGroup said its UK rail division had delivered like-for-like passenger revenue growth of 6.3 per cent on a “robust” uptick in passenger numbers.

But it reiterated a warning that earnings from this division would be “substantially lower in the first half and for the current year”.

It has been dealt a blow after failing to win new contracts to keep running services on First ScotRail and First Capital Connect, while also missing out on bids for several new deals.

The group is hoping that earnings from its UK and US bus businesses - the latter including Greyhould and First Student - will help make up for the shortfall.

Chief executive Tim O’Toole said: “We anticipate strong progress for the current year in our non-rail businesses, mainly from the First Student and UK Bus turnarounds, to largely offset the reduced size of our UK Rail franchise portfolio compared with the prior year.”