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MarketScreener Homepage  >  Equities  >  London Stock Exchange  >  FirstGroup    FGP   GB0003452173

FIRSTGROUP

(FGP)
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FirstGroup : losses jump after booking charge on for-sale Greyhound business

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11/14/2019 | 07:12am EDT
FILE PHOTO: The Wider Image: Along the U.S. - Mexico border fence

Losses at Britain's FirstGroup rose after it booked a 124 million pound ($159 million) charge on the Greyhound bus business it is trying to sell, as the U.S. intercity service struggles with problems including a drop in immigration-related demand.

Aberdeen-based FirstGroup, which runs bus and train services mostly in the U.S. and UK, put Greyhound up for sale earlier this year, partly due to growing competition from low-cost airlines. It said on Thursday that it was in talks with bidders for the business.

Shares in the company - which in the U.S. will focus on its core contracting business, including the First Student school bus service - fell 19% to their lowest level since July.

Greyhound faces a multitude of other issues, including immigration-related demand at the Southern U.S. border slowing to a five-year low in the second quarter as President Donald Trump tightened border controls, and lower fuel prices prompting people to use their cars instead of its coach services.

A revision to the short- and medium-term forecast for Greyhound led to the 124 million pound charge, FirstGroup said, but the company maintained its annual group forecast.

"We have had a huge amount of interest in the (sale) process, Chief Executive Officer Matthew Gregory said on a call with journalists, adding that it was holding detailed discussions with "a couple" of interested parties.

"Management continues to talk about progress in the portfolio rationalisation process but, absent actual disposals and with more substantial exceptional charges, we expect scepticism to prevail" Gerald Khoo, an analyst at Liberum said in a note.

FirstGroup, which is also looking at options to separate its UK bus division, booked an additional 60 million pound charge related to insurance costs and more than 15 million pounds of restructuring costs.

It posted a pretax loss of 187.1 million pounds for the six months ended Sept. 30, compared with a loss of 4.6 million pounds a year earlier.

Adjusted pretax profit for the first half dropped 31.7% to 28.7 million pounds, chiefly due to the adoption of a new reporting standard, it said.

FirstGroup, which is set to take over the UK's West Coast rail franchise that links London, Manchester and Glasgow next month, said it raised its 2019-20 outlook to reflect a part-year contribution from the new business, but the adoption of the new reporting standard would offset the benefit.

By Yadarisa Shabong

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Financials
Sales 2020 7 675 M 9 722 M 9 722 M
Net income 2020 48,3 M 61,2 M 61,2 M
Net Debt 2020 1 173 M 1 485 M 1 485 M
P/E ratio 2020 5,69x
Yield 2020 -
Capitalization 775 M 985 M 981 M
EV / Sales 2019
EV / Sales 2020 0,25x
Nbr of Employees 100 000
Free-Float 97,9%
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Technical analysis trends FIRSTGROUP
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TrendsNeutralNeutralBearish
Income Statement Evolution
Consensus
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Mean consensus OUTPERFORM
Number of Analysts 10
Average target price 94,40 GBp
Last Close Price 0,64 GBp
Spread / Highest target 21 844%
Spread / Average Target 14 696%
Spread / Lowest Target 9 304%
EPS Revisions
Managers
NameTitle
Matthew Gregory Chief Executive Officer, COO & Executive Director
David Robert Martin Non-Executive Chairman
Ryan Dirk Mangold Chief Financial Officer & Director
Warwick Brady Independent Non-Executive Director
Martha Poulter Independent Non-Executive Director
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