FirstGroup flags continued pressure despite improved earnings
By Josh White
Date: Tuesday 18 Nov 2025
(Sharecast News) - FirstGroup shares fell sharply on Monday, dropping almost 12% in early trading, after the transport group reported a rise in first-half earnings but flagged continued pressure on passenger volumes and a cash outflow linked to accelerated investment in its bus electrification programme.
The FTSE 250 passenger transport operator said it remained on course to deliver modest adjusted earnings-per-share growth for the full year, with the second half expected to benefit from completed restructuring measures.
Adjusted revenue rose 30% to £833.6m in the 26 weeks ended 27 September, driven by stronger bus revenues, the contribution of First Bus London and ongoing progress in its open-access and rail services operations.
Adjusted operating profit edged up to £103.6m from £100.8m, with efficiencies and acquisition-led gains partly offset by higher National Insurance costs and the conclusion of the South Western Railway National Rail contract.
Adjusted earnings per share increased 16% to 9.9p, supported by the buyback of 22 million shares during the period.
The company declared an interim dividend of 2.2p, up from 1.7p a year earlier.
First Bus delivered adjusted operating profit of £42.7m, up from £41.1m, despite what the group described as a challenging economic and policy backdrop.
Underlying passenger volumes fell 4% as a 7% decline in commercial traffic outweighed a 4% rise in concessionary travel, reflecting the transition to the £3 fare cap, weaker consumer confidence and some modal shift towards active travel.
Regional bus revenue grew 3.5%, while group-wide bus revenue increased 37% to £702.9m, boosted by the integration of First Bus London.
The division continued to improve service quality, with lost mileage down 24% to 1.3% and its net promoter score rising to 14.9.
Business and coach activities grew strongly, with revenue rising to £105.4m from £80.9m on contract wins, extensions and recent acquisitions.
The group continued to invest heavily in electrification, with around £105m of net capex in the half and co-funding from government schemes.
It now operates about 1,280 zero-emission buses, representing around 23% of the fleet, supported by three fully- and 17 partially-electrified depots, and has 40 diesel-to-electric repowered vehicles in service.
FirstGroup also invested in Palmer Energy Technology to introduce battery energy storage units across its depots.
In rail, open-access passenger journeys rose 2% to 1.43 million, producing revenue of £53.2m.
The group said long-distance passenger volumes on the East Coast Main Line remained well above pre-pandemic levels, supported by competition from open-access operators.
Rail services revenue increased to £53.6m from £48.1m, with almost one-third of contracted work now coming from external customers.
The group said it was on course to more than double its open-access capacity in the next two to three years, with rolling stock secured for its forthcoming London-Stirling route, new paths for Lumo and Hull Trains from December and preparations for the London-Carmarthen service, which begins track access in December 2027.
Applications had also been submitted for further extensions and new routes, including Cardiff-York and revised proposals for the Rochdale-London corridor.
Free cash outflow of £35.6m reflected accelerated investment in electrification, while adjusted net debt stood at £207.6m at the period end.
FirstGroup said it expected adjusted net debt of £125m to £135m at year-end before considering growth capital.
It returned £76m to shareholders in the half through buybacks and dividends.
"We have delivered a robust performance in the first half of 2026, made further progress in growing and diversifying the business and maintained our positive earnings trajectory," said chief executive Graham Sutherland.
"In the second half, we will benefit from the actions we have taken to restructure the business as well as the contribution of our recent acquisitions and expect modest growth in our adjusted earnings per share for the full year.
"Our focus remains on the delivery of our commitments, including the successful execution of our UK focused growth strategy.
"Underpinned by our strong balance sheet and disciplined capital allocation policy, we are well placed to deliver further benefits for all our stakeholders."
At 0927 GMT, shares in FirstGroup were down 11.78% at 176.8p.
Reporting by Josh White for Sharecast.com.
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