Weak pound boosts FirstGroup performance despite difficult market conditions

Shares in FirstGroup climbed over 3% early on Tuesday (7 February), after the transport operator reported an increase in third quarter revenue, as the weak pound helped it offset a difficult performance in its domestic business.

In the three months to the end of December 2016, the FTSE 250-listed company reported a 12.8% year-on-year increase in revenue, benefiting from favourable currency translation, following sterling's depreciation in the wake of Britain's Brexit vote.

Revenue, however, was flat on a constant currency exchange basis.

FirstGroup's US market was the main driver of growth, with revenue at the company's First Transit subsidiary rising 4% year-on-year in the period, while revenue at First Student, which runs school buses across the Atlantic, was 0.5% higher than in the corresponding period 12 months earlier.

Revenue in the US-based long distance coach service division Greyhound was up 1.2% for the quarter, but down 2.5% for the year to date, while in Britain, First Bus revenue was 0.6% and 1.1% lower respectively.

On a brighter note, however, UK First Rail business, which runs the Great Western Railway and TransPennine Express franchises, saw like-for-like passenger revenues grow 0.8% year-on-year.

Group chief executive Tim O'Toole said the third quarter performance continued to support the company's expectations of good progress for the current year, although he warned the economic environment remained uncertain.

"Our substantial North American operations are delivering encouraging performances and are benefiting from currency tailwinds, but we continue to experience tough trading conditions for our First Bus and First Rail operations in what remains an uncertain UK macroeconomic environment," he said.