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First Group (FGP) – Excuses, Excuses
First Group’s interim results were bad enough with adjusted profit before tax down 32.7% and operating profit by 14.7% for the six months to the end of September. Unbelievably the third quarter seems to have got worse, with what passes for management, being forced to produce what must be one of the longest list of excuses ever seen in a trading update, in a forlorn attempt to exonerate itself.
Hang on though, it was only in November that it was claiming “outperformance” in some areas but now it is saying that operating profit will be lowered because of the third quarter challenges which it could not cope with.
Group revenue for the quarter fell by 9.5% unless you exclude the factors responsible for the fall, in which case it actually rose by 0.9%. That is a bit like saying if I had not withdrawn all my money from the bank, I would still be wealthy.
The latest decline in the company’s fortunes is due, it claims, to;
Changes in the school calendar which means that some income will appear in next years accounts, rather than this.
Changes to the rail franchise portfolio.
A reduction in high street footfall
Exceptionally wet weather and flooding
Acute driver shortages in the USA leading to higher costs
Substantial reductions in the oil price.The company makes no mention of this hidden benefit having enabled it to bring costs down. Instead it claims it impacted the company by reducing demand for shuttle services to the Canadian oil sands.
A revenue fall of 5.2% at Greyhound buses, caused by the oil price fall leading to reduced demand. No mention of cost savings resulting from this.
First Rail – slower growth after the Paris terrorist attacks
Fear not though, the company’s transformation plans are making headway.
First groups share price has fallen 4% this morning and now stands at 98p. Five years ago it was 400p and it has, not surprisingly, been falling ever since. Today’ trading update is not likely to stop the rot. The company seems to be relying on hopes that its transformation plans will do the job.
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