FirstGroup shares slumped nearly 12% to 90.05p yesterday after the transport giant issued a full year profits warning, pinning the blame on UK floods and a lack of US bus drivers.
The Aberdeen-based group said its outlook for the year was “slightly lowered” in a trading update that revealed a 9.5% drop in revenues in its third quarter – the three months ended December 31.
The company said its bus and rail services were affected by the wet weather and flooding that caused havoc in many parts of the UK at the end of 2015.
As well as preventing certain services from running, the storms reduced income from passenger fares as fewer people braved the high street to do their Christmas shopping.
The Paris terror attacks in November caused the growth in demand for FirstGroup’s rail service to slow down, the firm said.
In the US, a tightening of the market has lowered the number of available workers and driven up wages, forcing the company pay more than expected for new drivers.
Its North American school bus division also took a hit from a decrease in the number of school days falling within the three months.
To make up for the time off, schools will pack in more days at the end of the academic calendar, which will fall into FirstGroup’s 2016/17 financial year.
Revenues at the group’s North American coach service, Greyhound, fell 5.2% as low fuel prices helped more people afford to take the car.
First Group also said its performance was hit by changes to its rail franchise portfolio in recent times.
In 2014, FirstGroup lost out on the iconic Caledonian Sleeper service to Serco and on the ScotRail franchise to Dutch firm Abellio.
It also missed out on the East Coast mainline service and the Thameslink franchise covering London’s commuter routes.
But last month it was boosted by the retention of the Transpennine Express rail franchise, which links the largest cities in the north of England and Scotland, until at least 2023.
Outside events affecting its most recent quarter, the company insisted its turnaround plan is improving performance and will lead to a jump in revenues in the medium term.
FirstGroup 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.”
The group will announce its full year results in June.