First Group books £150m loss as Coronavirus hampers transport sector

First Group books £150m loss as Coronavirus hampers transport sector

Bus and train operator First Group (LON:FGP) saw their shares dive on Wednesday, as Coronavirus saw the company book a deflated set of full-year results for the period ended March 31.

Unfortunately for the UK travel group, their results included March – the month in which the company saw a 90% reduction in passengers.

Despite booking an impressive 8.8% year-on-year jump in revenues, up to £7.8 billion, the company were hit with an £152.7 million operating loss. This followed on from a £9.8 million profit a year earlier, and a year of trading with broadly similar trends, prior to the pandemic.

The situation for First Group shareholders was equally bleak, with adjusted EPS dropping by 48.9% from 13.3p to 6.8p.

The company looks to be pinning its hopes of recovery on a return to normal trading, with consumers returning to some semblance of normal life. It said it was ‘immensely proud’ of the efforts of its staff – being based in Aberdeen, it will also have to contend with the slower pace of Scotland’s lockdown being lifted.

First Group response

In a cautious but overall hopeful outlook, company Chief Executive Matthew Gregory commented:

“There is no way of predicting with any certainty how the coronavirus pandemic will continue to affect the public transportation sector and the impact it may have on customer trends longer-term. However, as leading operators in each of our markets we are strongly positioned for a recovery in passenger demand and for the opportunities that may emerge from this exceptional period.”

“Despite the near-term uncertainty, the long-term fundamentals of our businesses remain sound. We are resolutely committed to delivering our strategy to unlock material value for all shareholders through the sale of our North American divisions at the earliest appropriate opportunity. The importance of public transport to society has never been more clearly demonstrated, and we will continue to take all necessary measures to enable the Group to emerge from this unprecedented situation in a robust position.”

Investor insights

Following the update, First Group shares plummeted over 17%, before recovering slightly, down 15.82% or 7.78p, to 41.40p per share 08/07/20. This is comfortably below the company’s median target price of 75.00p, and over 60% down on where it was a year ago. The Group’s p/e ratio currently stands at 3.42.