Transport giant Firstgroup has hiked its dividend as profit surged year-on-year due to the strong demand for rail and bus travel.
The FTSE 250 firm reported an adjusting operating profit of £204.3m, up from £161m, despite revenue dipping marginally to £4.7bn.
Off the back of this profit jump, Firstgroup hiked its full-year dividend by 45 per cent to 5.5p. This is in addition to the £118m already returned to investors via share buybacks.
On a statutory basis, the group reported a loss of £24.4m, but this was predominantly due to non-cash charges of £146.9m related to its exit from two local government pension schemes.
Shares rose over three per cent in early trading.
Chief Executive Officer Graham Sutherland said: “We have made considerable progress in our financial and operational performance in FY 2024 as we continue to transform and grow our leading First Bus and First Rail businesses.
“This is testament to the resilience and capability of our people across the Group and leaves us well positioned to grow and create further value for all our stakeholders.”
“Our focus remains on working with government and all our stakeholders to deliver for our customers and drive modal shift.”
The increase in profit was due in part to a jump in passenger demand at Firstgroup’s rail segment, First Rail, which runs major British operators, including Great Western Railway, South Western, and Avanti West Coast.
Total rail passenger journeys reached 274m in full-year 2024, up from 263m, with both its open access and operating company ahead of expectations as demand edged back to pre-pandemic levels.
Lumo, Firstgroup’s open access subsidiary, has now carried over 2.5m passengers since its launch, while Hull trains added 14 per cent to capacity over the last year.
Firstgroup said its bus division is on track to achieve 10 per cent adjusted operating margin, having grown to 9.4 per cent in half-year 2024.
Looking ahead, Firstgroup said it expected to continue to trade in line with current expecations. Its adjusted net cash position is forecast to be in the range of between £40-50m at the end of full-year 2025. It is also working towards a 10 per cent adjusted operating profit margin.
Adam Vettese, analyst at investment platform Etoro, said: “Firstgroup has pulled up with a set of results that make for good reading, with a jump in year-on-year operating profit and margins. This is somewhat of a surprise given that the past year has been dominated by strikes and unreliable service, notably on Firstgroup’s own Avanti West Coast service. The disruption to travellers doesn’t seem to bother the balance sheet however with the firm ending 2024 with a strong cash position also.
“A healthy 45% increase in the dividend might even persuade some disillusioned passengers that being an investor is a better way to go. If the firm continues to achieve growth in line with what they have set out then investors will want to see a continuation of the strong post pandemic performance of the share price and to push on towards those legacy highs, back above the 200p mark.”