FirstGroup plc

The group reported adjusted revenue of GBP 834 million, up 30%; adjusted operating profit of GBP 103.6 million, up 2.8%; adjusted earnings of GBP 55.5 million, up 7.1%; and adjusted EPS of 9.9p, up 16.5%. The interim dividend was proposed at 2.2p per share, up 29.4%. Adjusted net debt was GBP 207.6 million, and debt cover was 0.95x. For full-year 2026, management expects modest growth in adjusted EPS, bus revenue to be above GBP 1.4 billion, the IFRS 16 positive impact to EBIT to be circa GBP 36 million, central costs to be circa GBP 8 million lower, interest to be about GBP 60 million, net bus CapEx to be circa GBP 180 million, and adjusted net debt to end the year at circa GBP 125 million to GBP 135 million. For full-year 2027, they expect adjusted EPS to be at least maintained at the higher base as more DfT contracts transfer into public ownership.

Graham Sutherland struck an upbeat but measured tone, emphasizing that the group fully offset lower bus funding, wage pressure and higher employer national insurance costs through strong execution. He highlighted First Bus London, open access rail growth, electrification, and portfolio diversification as core strategic pillars, and said the company is well positioned for the rest of the year. He also framed the remaining rail-transition period as manageable, with the business focused on operational delivery and UK growth opportunities.

Ryan Mangold focused on the financial bridge from earnings to cash and balance sheet discipline. He cited adjusted operating profit of GBP 103.6 million, adjusted earnings of GBP 55.5 million, adjusted EPS of 9.9p, and net debt of GBP 207.6 million, noting that cash generation was affected by accelerated bus electrification CapEx. He said the group generated GBP 223.7 million of capital from operations over 12 months, spent GBP 126.5 million on CapEx, returned GBP 37.1 million in dividends and GBP 99.1 million through buybacks, and ended with a debt cover ratio of 0.95x. He also pointed to around GBP 15 million of annualized overhead savings from the restructure and said the business is maintaining leverage below 1x on an underlying basis.

Analysts focused on bus franchising, higher CapEx, and the implications of owning electric buses in London versus leasing them. Management said franchising is both a risk and an opportunity, especially in West and South Yorkshire, but they may also release capital where depots and fleets are sold; they declined to quantify revenue at risk or opportunity because negotiations are ongoing. On CapEx, Ryan said the increase was driven mainly by the trial of 59 EVs on a London route, while better cash generation and a GBP 20 million pension escrow release help explain why net debt guidance is not rising proportionately. On rail services and DfT TOCs, management said the outlook is improved because of better performance, longer contracts, and an assumption that both remaining TOCs transfer by the end of FY27, but the exact government path remains uncertain.