First Group cuts full-year guidance after Greyhound earnings muzzled by snowstorms

Transport operator First Group dropped its full-year earnings guidance on Wednesday after its coach and bus units in the US were hindered by severe snowstorms across North America throughout January and an increasing level of competition from budget airlines such as Spirit.

First Group said its earnings per share would be "slightly reduced" but advised there was not likely to be any change to "management's expectation of substantial cash generation for the year."

Greyhound's parent company told investors in a Wednesday morning trading update that its outlook for adjusted earnings per share from its current financial year would be "slightly reduced overall".

Like-for-like revenues at Greyhound dropped 2.8% year-on-year in the four months to 20 January, and while the iconic US coach operator saw continued strong business in short trips, it said "this was more than offset by intensifying challenges in the larger long-haul segment in the face of low-cost airline competition, which also resulted in a disappointing holiday season."

Elsewhere in the group, First Transit, its US public transport business, witnessed a drop in revenue of 0.1% over the quarter, however this had bounced back 2.6% in the year to date, and First Student, its American school bus unit, reported a 0.3% increase in revenue for the quarter, which then had declined 0.9% throughout January.

In the UK, like-for-like revenue at First Rail increased 1.4% over the quarter and expanded 3.2% during January, despite continued infrastructure challenges for Great Western Railway and South Western Railway franchises, while First Bus delivered a 1.4% rise in like-for-like revenue over the quarter and a 0.9% gain for the year-to-date.

Over the quarter ended 31 December, First Group began the process of refinancing its debt and raised $275m through US private placement notes in an issue that ended 15 February, the proceeds of which will be received by the group on 27 March.

First Group warned investors it would incur an exceptional charge of £11m during the 2018 trading year linked to refinancing activities, offset by annual interest savings of £14m from the next year onwards.

"We reached an important milestone in the period with our long-dated bond portfolio beginning to mature, allowing us to significantly reduce our interest burden by starting to refinance and rebalance the group's debt," said chief executive Tim O'Toole.

As of 0920 GMT, shares were driving off with 11.35% less, sitting at 85.26p.