FirstGroup plummets as UK Bus flounders in the north

Transport firm FirstGroup says lower economic activity in the north of England is putting pressure on its UK Bus business but North American operations are progressing.

The group says like-for-like revenues in UK Bus, in the 12 months to the end of March, will be 1.5% ahead of 2010-2011. The North of England and Scotland however are seeing "considerably lower" growth rates and that's where 60% of revenues are generated.

This is clearly a concern for the firm, which says it will also be hit by reduced government subsidies and increased fuel costs. Margins are predicted to fall to 8% in 2012-2013.

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The US school bus service, which had been struggling, is now described as "on the path to recovery" although revenues will fall 1.4% compared with the prior year.

The transit division will see revenues grow 1.5%, while Greyhound, the famous coach service, is performing "well" with revenues growing 4.2%.

UK Rail is also delivering: like-for-like revenues will rise 8.3% by the year's end says FirstGroup. It has also qualified to bid for three new rail franchises: Great Western; Thameslink; and Essex Thameside.

The warning on UK Bus, however, has really dented the stock in early trading, at 08:11 FirstGroup shares had fallen 15.7%.

BS