FirstGroup CEO Matthew Gregory said, “Despite the short-term uncertainty, the long-term fundamentals of our business remain solid.”
However, FirstGroup was the biggest bear on the FTSE 250 on Tuesday early in the session, with stocks down around 16% at noon in London. The company’s share price has dropped by more than two-thirds since February.
Since the start of the coronavirus shutdown in March, passenger numbers have plunged into its rail and bus divisions, which now depend on state support to continue, and FirstGroup has yet to be able to sell its struggling US bus operations as expected.
The transport operator said that if the emergency grants had maintained the viability of its operations, there was “significant uncertainty as to the continuation of these measures” and “no way to predict” how the coronavirus would leave its services. passenger transportation.
He warned that if the crisis were to persist, there were doubts about “the extent to which governments and clients will continue to have the capacity to provide fiscal and contractual support”, and the cumulative risks meant “that it there is significant uncertainty which can cast significant doubt on the ability of the group and the company to continue operating ”.
FirstGroup maintains a £ 850 million cash reserve to help it overcome uncertainty, including a £ 300 million loan from the Bank of England’s Covid-19 business financing facility.
In the UK, First shared additional government funding of £ 3.5 billion for rail operators and £ 400 million for bus companies, protecting them from lost revenue.
The company said its Great Western and Avanti West Coast franchises had performed well last year – if not TransPennine and SouthWestern services, the collapse of which was widely anticipated before the franchises were suspended in March.
Reported losses of £ 294.6 million occurred despite a 9% increase in revenues during the 12 month period ending in March 2020, before the start of the pandemic, with impairments due to problems of insurance in North America and losses on its Greyhound intercity bus service in the United States. .
First, March was “traditionally a solid period of exchange for the group”, but the number of passengers in all operations was down 90% at the end of this month, the North American schools served by its First Student service being closed due to the pandemic.
First still aims to offload all of its bus operations in the United States, but has not yet found a buyer, having finally put them on sale in March when the impact of the coronavirus became apparent.
Gregory said, “The funding and support we have received from governments and our customers to support essential transportation services is testament to their importance today and for the future.
“There is no way to predict with certainty how the coronavirus pandemic will continue to affect the public transportation sector and its impact on longer-term customer trends. However, as leading operators in each of our markets, we are strongly positioned for a recovery in passenger demand and for the opportunities that may emerge from this exceptional period. ”
Gregory said the group remains “firmly committed” to selling its North American divisions as soon as possible, including First Transit, its scheduled city bus division.
Some city analysts said they still support the group despite disappointing results and significant challenges ahead. Gerald Khoo of Liberum said the impact of the coronavirus had come earlier than expected and that “the results were far below expectations”.
Khoo added: “The support of governments and customers has been crucial to allow the group to continue to generate cash. We expect this support to continue, but any reluctance to do so is a key risk. We still see clear value, but the challenges are naturally greater. “