Transport giant FirstGroup reported a dip in revenue in the first quarter yesterday, adding that it is too early to say what impact Britain’s decision to quit the European Union will have on the company.
Sales across the firm, which runs TransPennine Express rail services connecting Yorkshire to the North-West and Newcastle as well as buses across the region, fell 1.4 per cent, largely due to poor trading in the US, where it operates Greyhound coaches.
Underlying revenues at the group’s bus division slipped 1.4 per cent in the three months to 27 June, with passenger volumes continuing to be affected by lower high street retail footfall and congestion impairing some of its services.
Underlying revenues at the company’s rail division rose 2.3 per cent, a slowdown from the previous quarter, as engineering work affected the company’s Great Western Railway subsidiary.
On Brexit, the Aberdeen-based business said: “It is too soon to judge the overall effect of the EU referendum decision on the group.
“More than two-thirds of group adjusted operating profit was generated in North America in the last financial year, and the weakening of sterling since the referendum outcome would, if maintained, result in translation benefits from our US dollar denominated businesses.
“The degree to which the net currency benefit from our US-based operations will be offset by more challenging UK economic conditions for our UK-based businesses is uncertain at this stage.”
Nevertheless, FirstGroup maintained its outlook for the year.
Last month, FirstGroup saw annual results come under pressure after being hit by the loss of rail franchises such as the East Coast Line and ScotRail, but said it was set to make “strong progress”.
The group reported a one per cent fall in underlying earnings to £300.7m for the year to March 31, with revenues dropping by 13.8 per cent after losing the franchises, while its First Student business was impacted by the timing of the school calendar.
Underlying pre-tax profits edged 2.7 per cent higher to £168.3m.
The firm added that it was planning to make further savings in its First Bus arm - which runs a fleet of around 6,300 buses - having already slashed costs by more than £20m in the past financial year, closing depots as part of cost-cutting efforts.
FirstGroup warned over profits in January, with poor weather and extreme flooding across Cumbria and the North of England at the end of last year compounding already difficult trading.
Its rail arm, which operates the Great Western Railway and First TransPennine Express franchises, also suffered a drop-off in demand from passengers following recent terrorist attacks in Paris and Brussels.
FirstGroup won a seven-year contract in December to continue running the TransPennine Express railway line.