Public cutbacks knock profits at FirstGroup

FirstGroup suffered a slump in profits yesterday after higher fuel costs and public spending cutbacks dented full-year figures. As the largest provider of student transport in North America, with a fleet of around 60,000 yellow school buses, FirstGroup has felt the impact of "unprecedented levels" of pressure on school board budgets.

The company's Greyhound intercity coach business in the US has also been squeezed by recession, but FirstGroup said UK rail and bus services produced resilient performances in the year to 31 March. With FirstGroup also facing increased fuel costs of £90m, the Aberdeen-based company posted adjusted pre-tax profits of £264m, down from £326.4m a year earlier. It achieved savings of more than £200m during the year and said it expected a return to earnings growth in the current financial period. Its chief executive, Sir Moir Lockhead, said: "Looking ahead we anticipate the new financial year will remain challenging."