| Firstgroup's rail division trading 'ahead of expectations' Posted by ChrisB at 20:57, 15th April 2025 |     |
From Business Live, via MSN
Firstgroup's rail division has been performing better than anticipated, despite the UK government's radical reforms of the railway network that are raising industry-wide concerns.
On Tuesday, the publicly-traded transport company acknowledged that revenues from the Department for Transport (DfT) for contracted train operators surpassed previous projections, as reported by City AM.
The firm is also experiencing "strong demand" in its open access services, which are delivered by Lumo and Hull Trains.
Within the half-year period, Firstgroup secured access rights for two additional open access services and cemented a £500 million deal to lease 14 new trains manufactured in the UK.
However, the company has issued several warnings indicating that the establishment of the state-run Great British Railways (GBR) might constraint the expansion of open access services.
In comments to the DfT submitted on Monday, Firstgroup expressed apprehension that GBR could display "adverse monopolistic" behaviour, advocating for the Office of Rail and Road (ORR) regulator, responsible for approving new routes, to be "empowered to adjudicate fairly and impartially with fair, transparent and open decision-making."
Graham Sutherland, the head of Firstgroup, mentioned existing agreements that would allow them to double their open access operations with possibilities for even further growth.
In a reflective statement, Firstgroup declared its balance sheet remains "strong," projecting its net debts to fall between £85 and £90 million by the year's end.
At First Bus, the company predicts a two per cent rise in passenger numbers, with revenue from First Bus London expected to reach between £300m and £350m annually. The firm also anticipates maintaining its adjusted earnings per share in 2026.
"We have continued our strong financial and operational delivery in the second half of our financial year and have committed significant capital to further grow and diversify our portfolio," Sutherland stated.
On Tuesday, the publicly-traded transport company acknowledged that revenues from the Department for Transport (DfT) for contracted train operators surpassed previous projections, as reported by City AM.
The firm is also experiencing "strong demand" in its open access services, which are delivered by Lumo and Hull Trains.
Within the half-year period, Firstgroup secured access rights for two additional open access services and cemented a £500 million deal to lease 14 new trains manufactured in the UK.
However, the company has issued several warnings indicating that the establishment of the state-run Great British Railways (GBR) might constraint the expansion of open access services.
In comments to the DfT submitted on Monday, Firstgroup expressed apprehension that GBR could display "adverse monopolistic" behaviour, advocating for the Office of Rail and Road (ORR) regulator, responsible for approving new routes, to be "empowered to adjudicate fairly and impartially with fair, transparent and open decision-making."
Graham Sutherland, the head of Firstgroup, mentioned existing agreements that would allow them to double their open access operations with possibilities for even further growth.
In a reflective statement, Firstgroup declared its balance sheet remains "strong," projecting its net debts to fall between £85 and £90 million by the year's end.
At First Bus, the company predicts a two per cent rise in passenger numbers, with revenue from First Bus London expected to reach between £300m and £350m annually. The firm also anticipates maintaining its adjusted earnings per share in 2026.
"We have continued our strong financial and operational delivery in the second half of our financial year and have committed significant capital to further grow and diversify our portfolio," Sutherland stated.
| Re: Firstgroup's rail division trading 'ahead of expectations' Posted by ChrisB at 09:28, 16th April 2025 | |
This Is Money's take on the same story
FirstGroup will 'double' private rail operations to counter Government's nationalisation push
FirstGroup has upgraded 2025 profit guidance after a better than expected showing from its rail division over the last year.
The FTSE 250 Avanti West Coast and Great Western Railway owner expects higher than forecast variable operator fees from the Department of Transport, while its non-taxpayer funded open access operations continued to perform well.
The Government passed a bill last year that will bring rail passenger services back into public ownership by appointing a public sector operator when existing contracts expire.
While the timing of nationalisations has not been confirmed, FirstGroup's South Western Railway and Great Western Railway will see DfT contracts expire in May and June, respectively.
Avanti West Coast's contract expires in October next year.
FirstGroup said its open access operations like Lumo and Hull Trains, which manage trains on mainline routes without government funding, had benefited from 'strong demand, effective yield management and continued high levels of customer satisfaction'.
It has acquired track access rights for two new open access services and signed a £500million agreement to lease 14 new UK-manufactured trains, to facilitate the growth of its open access operations.
Boss Graham Sutherland said First Rail has agreements in place to 'double the size of our open access operations with potential to go much further'.
Its First Bus division also saw revenue accelerate in the second half, buoyed by the January introduction of the £3 fare cap in England and the December acquisition of RATP London.
FirstGroup re-entered the London bus market with a 12 per cent share after agreeing the takeover worth £90million.
The firm said: 'Reflecting the stronger financial performance in First Rail and in-line performance at First Bus, the Group anticipates that its FY 2025 adjusted operating profit and adjusted earnings per share will be ahead of the Group's previous expectations.'
It added that its balance sheet 'remains strong' and it expects net debt to come in lower than expected at £85million to £90million for the 12 months to 29 March.
Sutherland said: 'We have continued our strong financial and operational delivery in the second half of our financial year and have committed significant capital to further grow and diversify our portfolio.'
FirstGroup shares were up 1.8 per cent to 162.1p in early trading, trimming 2025 losses to 0.6 per cent.
FirstGroup has upgraded 2025 profit guidance after a better than expected showing from its rail division over the last year.
The FTSE 250 Avanti West Coast and Great Western Railway owner expects higher than forecast variable operator fees from the Department of Transport, while its non-taxpayer funded open access operations continued to perform well.
The Government passed a bill last year that will bring rail passenger services back into public ownership by appointing a public sector operator when existing contracts expire.
While the timing of nationalisations has not been confirmed, FirstGroup's South Western Railway and Great Western Railway will see DfT contracts expire in May and June, respectively.
Avanti West Coast's contract expires in October next year.
FirstGroup said its open access operations like Lumo and Hull Trains, which manage trains on mainline routes without government funding, had benefited from 'strong demand, effective yield management and continued high levels of customer satisfaction'.
It has acquired track access rights for two new open access services and signed a £500million agreement to lease 14 new UK-manufactured trains, to facilitate the growth of its open access operations.
Boss Graham Sutherland said First Rail has agreements in place to 'double the size of our open access operations with potential to go much further'.
Its First Bus division also saw revenue accelerate in the second half, buoyed by the January introduction of the £3 fare cap in England and the December acquisition of RATP London.
FirstGroup re-entered the London bus market with a 12 per cent share after agreeing the takeover worth £90million.
The firm said: 'Reflecting the stronger financial performance in First Rail and in-line performance at First Bus, the Group anticipates that its FY 2025 adjusted operating profit and adjusted earnings per share will be ahead of the Group's previous expectations.'
It added that its balance sheet 'remains strong' and it expects net debt to come in lower than expected at £85million to £90million for the 12 months to 29 March.
Sutherland said: 'We have continued our strong financial and operational delivery in the second half of our financial year and have committed significant capital to further grow and diversify our portfolio.'
FirstGroup shares were up 1.8 per cent to 162.1p in early trading, trimming 2025 losses to 0.6 per cent.
| Re: Firstgroup's rail division trading 'ahead of expectations' Posted by stuving at 00:03, 17th April 2025 | |
The full-year trading update, which was the main topic of those news reports, is short. It's only about the same length as each article, so they mostly just repeat its content.
There was also some mention of First Group's submission to the consultation on the Railways Bill here:
From Business Live, via MSN
In comments to the DfT submitted on Monday, Firstgroup expressed apprehension that GBR could display "adverse monopolistic" behaviour, advocating for the Office of Rail and Road (ORR) regulator, responsible for approving new routes, to be "empowered to adjudicate fairly and impartially with fair, transparent and open decision-making."
That submission is 22 pages, and hard to summarise as it answers the questions in order. Much of it does, as suggested, argue the case for open access to be maintained, with the ORR seen as a neutral referee to protect it. They also make a case for the passenger to have official allies:
4.1 First Group support a strengthened role for a passenger watchdog in the form of the Passenger Standards Authority (PSA). However, we are concerned at a macro level that the passenger is under-represented in the proposed industry structure given:
...
6.1 FirstGroup supports the continuation of a common Rail Ombudsman (RO) service across all operators, and we would expect GBR to be subject to the RO service on the same terms as other operators.
...
6.1 FirstGroup supports the continuation of a common Rail Ombudsman (RO) service across all operators, and we would expect GBR to be subject to the RO service on the same terms as other operators.
Yesterday's Times had quite a long article - over half a page - specifically on the case made for open access, and how important that will be for First once its service contracts end.
| Re: Firstgroup's rail division trading 'ahead of expectations' Posted by TaplowGreen at 08:32, 20th April 2025 | |
I wonder how much of this "better than expected" financial performance for FirstGroup will be reflected in additional investment into GWR services?
Will customers see any improvements as a result?
(As opposed for example to "better than expected" returns for shareholders and senior managers?)
| Re: Firstgroup's rail division trading 'ahead of expectations' Posted by a-driver at 08:57, 20th April 2025 | |
I wonder how much of this "better than expected" financial performance for FirstGroup will be reflected in additional investment into GWR services?
Will customers see any improvements as a result?
Will customers see any improvements as a result?
No private company will invest when there’s no chance of recouping their investment.
And that won’t change when it goes back under public ownership.
| Re: Firstgroup's rail division trading 'ahead of expectations' Posted by TaplowGreen at 10:11, 20th April 2025 | |
I wonder how much of this "better than expected" financial performance for FirstGroup will be reflected in additional investment into GWR services?
Will customers see any improvements as a result?
Will customers see any improvements as a result?
No private company will invest when there’s no chance of recouping their investment.
And that won’t change when it goes back under public ownership.
Fair point - good news for the shareholders, not so good for the taxpayers!
| Re: Firstgroup's rail division trading 'ahead of expectations' Posted by Noggin at 11:14, 20th April 2025 | |
Remember that First have a *long* experience of quietly playing politicians and civil servants and it's arguable that the GWR franchise is one of the better ones as a result of them plugging away at it for over 20 years, making the best of the IET, coping with electrification, aging rolling stock, lack of long-term investment etc.
I've always suspected that one of First's strategies was to be "The Devil you know" i.e. with GWR, they delivered the goods at an affordable subsidy level and didn't cause politicians or civil servants too many headaches - but they were no-one's poodle and would operate sharply where necessary.
So I suspect the statements around open access and their existing franchises might be a throw of the dice to get a couple more years on their existing franchises - "let us discreetly take care of things for a couple more years whilst you sort out GBR, no-one but the trainspotters will ever notice".
| Re: Firstgroup's rail division trading 'ahead of expectations' Posted by ChrisB at 11:22, 20th April 2025 | |
The DfT do seem to be picking on the better run operations first for transfers. If they keep that up next year, I suspect GWR will be one of those selected, personally speaking
| Re: Firstgroup's rail division trading 'ahead of expectations' Posted by TaplowGreen at 07:58, 21st April 2025 | |
The DfT do seem to be picking on the better run operations first for transfers. If they keep that up next year, I suspect GWR will be one of those selected, personally speaking
How are you defining "better run"?
| Re: Firstgroup's rail division trading 'ahead of expectations' Posted by a-driver at 08:58, 21st April 2025 | |
The DfT do seem to be picking on the better run operations first for transfers. If they keep that up next year, I suspect GWR will be one of those selected, personally speaking
How are you defining "better run"?
I wouldn’t use the term better run, but the ones they have taken or plan to take over first have their “benefits” to the DfT.
Greater Anglia - whole brand new fleet of trains, one of the most punctual operators as a result serving the busiest London terminus.
C2C - a simple, straightforward one or two route operation, with a relatively new fleet.
SWR - One of the most profitable franchises.
I reckon GWR will be one of the last, purely because of its varied operation.
| Re: Firstgroup's rail division trading 'ahead of expectations' Posted by stuving at 10:29, 21st April 2025 | |
All of this is well explained in a House of Commons Library "Insight" paper. This points out that the government's declared policy is to take over one TOC roughly every three months, determined by the capacity of the OLR organisation to cope with them. Termination dates will be as determined by the contracts, subject to the DfT's powers to adjust them at no cost.
So far existing OLR contracts have been extended, but GA's built-in extension was cut back to this autumn. The next one should be at the end of this year, and four contracts could be terminated then with the required three periods of notice: WMR, Chiltern, and GTR - which have all passed their core term expiry date already - and GWR which will reach that in June. I guess we'll find out this summer, assuming the actual notice period is six months. So any choice of which to cull first will be between those; the next core term expiry date is not until EMR in October 2026. The only final expiry date in 2026 is WMT in September, so they will need to go before then.
At least that's the plan now. It may change a bit once they get some experience, though the OLR takeover process itself isn't new. They will need to work out where all the extras management staff to give the OLR corporeal form will come from. And then, somehow, GBR has to precipitate out of this interim solution ...
| Re: Firstgroup's rail division trading 'ahead of expectations' Posted by ChrisB at 11:41, 21st April 2025 | |
The minimum notice period, as you say in your post, is three periods (4 weeks x3), so 12 weeks or just under 3 months. Not sure why you then suggest it'll be 6 months (in practice?)
And as far as I can see in the legislation, there's nothing to prevent those three periods ending at the core period end date, rather than starting then. So it seems possible to transfer at the end of core period.
