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First Group margins hit by big fuel hikes

Steve Dinneen
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TRANSPORT giant First Group warned yesterday its margins had been hit by soaring fuel prices and cut backs in public spending.

It led to a slump of 19 per cent in full-year profit – down from £326m in 2009 to just £264m.

The cost of petrol alone hit the Aberdeen-based company for more than £90m, chipping away at impressive savings that still totalled £200m.

First runs four rail franchises; Great Western, ScotRail, Trans Pennine Express and Capital Connect. It said like-for-like passenger revenue in these businesses rose by 2.6 per cent – above most expectations.

However, profits at the UK’s biggest network of buses slipped from £134m to £125m, despite passenger revenue creeping up 1.9 per cent.

The firm was particularly hard hit by pressure on its US interests, describing trading conditions for its vast fleet of yellow school buses as “unprecedented”.

Its Greyhound intercity network saw its profit for the year halved as it limped to just £23.9m, down from almost £50m in 2009.

Chief executive Sir Moir Lockhead said: “We have delivered a resilient performance in line with management expectations against the backdrop of a challenging trading environment and significantly higher hedged fuel costs.

“Our clear strategy to lead the group through this tough trading environment enabled us to take prompt and decisive action to mitigate the impact of the recession on trading.”

Lockhead added: “We believe that each of our businesses has significant potential for long-term growth. The actions we have taken have created a stronger base and will ensure we are well placed to deliver long term value for shareholders.”