Difficult trading in North American, almost no growth, no wonder shares in Aberdeen-based transport operator FirstGroup (FGP) are flat today at 99.8p.

A decline in oil drilling and exploration in the Canadian oil sands region led to a fall-off in demand for First Transit’s shuttle services and consequently, US Dollar revenues are expected to be approximately 5% lower in the first half. Management maintains that further contract awards and organic growth in the rest of the division should substantially mitigate these impacts over the course of the financial year, even if overall growth in the current year is not expected.


Greyhound was another dog for the group. Management are blaming declining passenger demand on the sharp fall in fuel prices experienced across the intercity coach industry since prices fell sharply in October/November 2014.

Elsewhere in the group, the transformation of UK Bus is firmly in the slow lane. Commercial passenger revenues are up 2% or so in the first half, but even that limited progress was offset by declining concessionary revenues. Overall like-for-like revenue growth for the division is expected to run at a pretty dismal 1.3%.

UK rail, despite being smaller as a result of losing out on a number of franchises last year, remains the group's best performer. Strong passenger volumes will likely drive a 7% rise in like-for-like passenger revenues, not shabby for such a mature operation.

But it's hard to get exciting about the investment story. Panmure Gordon analyst Gert Zonneveld tried his best to ignite a bit of interest, saying that he still think the valuation is attractive. Yet even he can't bring himself to tell clients to buy, maintaining his fence-sitting hold recommendation on the stock. He sees few catalysts in the short term.

Issue Date: 02 Oct 2015