Severe weather hits FirstGroup
Jim Armitage is the City editor of The Independent and London Evening Standard group of newspapers. He has been a reporter and editor for more than 20 years and was recently shortlisted for the Press Gazette financial journalist of the year and The Society of Editors financial journalist of the year awards. He contributes news, investigative reports and comment to the Independent titles plus a daily column in the Evening Standard.
Deputy business editor
Wednesday 02 April 2014
FirstGroup, the transport giant, heaped more bad news on investors today, giving ammunition to the New York activist investor agitating for change.
FirstGroup said bad weather in the US had hit its student bus operations there between December and March, as snowed-in schools closed their doors, making First’s famous yellow buses redundant.
That hit revenues in nearly all the areas in which the company operates in North America, meaning its First Student profit margins will be 1 per cent lower than it had previously told investors to expect. Its Greyhound routes in the US also suffered from the weather.
However, UK trains and buses fared well despite the floods, and chief executive Tim O’Toole said the group had made “satisfactory” progress. “We will deliver earnings growth this year,” he said in a trading statement before full-year results due out next month.
New York hedge-funder Tom Sandell, a former badminton prodigy, has been calling on FirstGroup to spin off its US businesses and sell Greyhound, the famous US bus network, in order to raise funds to invest in UK rail franchises.
However, his public attacks have gone quiet in recent weeks, as management at FirstGroup have begun talking to him about his proposals. He was not expected to fire off another broadside after today’s announcement.
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