FirstGroup’s cash output is slowing down

TRANSPORT operator FirstGroup said its cash generation for the full year would be lower than first thought because the tough economic climate had prevented it from selling as many of its businesses as planned.

FirstGroup, which operates rail and bus services in Britain and owns the Greyhound coach company in the US, now expects to generate net cash of between £100m and £115m.

The company said it had been affected by “fewer disposals as a result of the economic and regulatory climate affecting the realisation of appropriate value and timing.”

FirstGroup’s overall trading in the third quarter of its financial year was in line with its own expectations, it added.

The firm said like-for-like UK passenger revenue increased by 1.8 per cent in the third quarter of 2011.

But it added the “weak economic environment” continued to present challenging trading conditions.

The Aberdeen-based firm said this was particularly the case in the north of the country, where a significant portion of its urban operations were concentrated.

It added: “As a result we are achieving lower growth rates in these areas as we see a widening north-south divide.

“Our priority remains to maintain our strong cost discipline and focus while equipping our networks, as appropriate, for future growth.”

In November, FirstGroup asked the Office of Fair Trading for permission to cut back on bus routes linking Glasgow city centre with some destinations in eastern Scotland.

FirstGroup applied to vary its undertakings in part because of an appreciable fall” in passenger demand and significant increases in operating costs.