Yahoo Finance FirstGroup Warns Floods Will Hit Profits
Shares (Berlin: DI6.BE - news) in transport operator FirstGroup (LSE: FGP.L - news) have plunged after it warned that last month's "exceptionally wet weather and flooding" would water down annual profits.
The stock fell 12% after the firm's latest quarterly trading update which revealed that the flooding had impaired services in parts of its UK bus business,
Revenues in this division were also hit by a lower-than-expected level of pre-Christmas shopping trips to the high street – reflecting retail sector data showing many consumers stayed at home and went online instead.
Meanwhile FirstGroup's rail business – which includes the Great Western (Other OTC: GWMCF - news) and Transpennine franchises – saw "some slowing in passenger demand growth" after the Paris attacks in November as well as in areas affected by flooding – though this was not expected to hit annual earnings.
It (Other OTC: ITGL - news) comes after rival Stagecoach last month said it had also been affected by the terror attacks.
In the US, FirstGroup was hit by a shortage of drivers, due to a tightening labour market, in the First Student division that operates yellow school buses.
The company said its outlook for operating profit in the current financial year to the end of March was "slightly lowered by trading in the period", but that a longer-term turnaround remained on track.
Chief executive Tim O'Toole said: "Our transformation plans continue to make headway despite a challenging third quarter trading period in our markets, with disappointing retail footfall and the terrible weather affecting First Bus, and our largest division First Student experiencing acute driver recruitment and retention challenges in certain locations (Other OTC: UBGXF - news) ."
