SHEFFIELD bus operator FirstGroup said it was seeing green shoots of recovery in its embattled bus business – despite reporting a 33 per cent plunge in half-year earnings at the division.
The UK’s biggest bus operator posted operating profits of £39.6 million for its bus arm, down from £59.4 million a year earlier as higher fuel costs, lower demand and reduced subsidies took their toll.
The plunge contributed to a 42 per cent fall in group wide underlying pre-tax profits to £48.7 million in the six months to September 30.
But FirstGroup said there were encouraging signs that a ‘clear and detailed plan’ to fix the bus operation was beginning to work in some of its markets.
Aberdeen-based FirstGroup has been introducing local fare promotions, which it said had boosted passenger numbers by 17 per cent in Sheffield and by 25 per cent across certain routes in the Manchester area.
It is also revamping its bus depots and vehicle repair operations, while spending £160 million on 1,000 new buses and revamping a further 750 as part of a £4 million modernisation programme.
The group is investing another £27 million in new ticketing technology, including a ‘touch-in, touch out’ contactless payment system using bank cards.
Bus passenger revenues rose by 2.6 per cent on a like-for-like basis in the first half.
FirstGroup has about 8,000 buses operating in 40 towns and cities across the UK, carrying 2.5 million passengers every day.
Today’s half-year figures also showed a sharp drop in earnings at its rail division, down 36 per cent to £35.4 million, although it said this was down to an expected hit from First TransPennine Express, which is operating under new franchise terms at margins closer to the industry average.
FirstGroup, which operates a quarter of Britain’s rail lines, said like-for-like rail passenger revenues rose 8.1 per cent in the first half.
As well as TransPennine Express, which serves Sheffield and Doncaster, it runs First Great Western, First Capital Connect and Scotrail services.
The group played a part in helping provide transport for the summer’s Olympics and is permanently retaining a 24-hour customer support centre set up for the Games.
Profit falls in bus and rail were partially offset by a better performance elsewhere, with its US Greyhound coach division reporting a 10 per cent rise in operating profits to £33.5 million.
The group also eased declines in its student bus service in the US, which has been knocked as school budgets come under pressure.
First Student earnings edged down to £5.2 million from £5.5 million a year earlier.
Tim O’Toole, chief executive, said: “The group is in a period of transition and while there is significant work still to do, we are satisfied with the progress of the actions we have taken so far.”
FirstGroup employs 124,000 staff and carries 2.5 billion passengers a year across its operations.