FirstGroup has reported the following update on trading since the start of our 2016/17 financial year.

Highlights include: 

• Trading performance as outlined at recent full year results in June has continued during the first quarter 
• Group revenue in the first quarter decreased by 1.4% in constant currency, with revenue growth in First Student, First Transit and First Rail offset by decreases in First Bus and Greyhound 
• No change to overall outlook for the current year, recognising that the degree to which potential net currency benefits as a result of our significant US dollar based businesses will be offset by a more challenging macroeconomic outlook for our UK businesses is uncertain, following the outcome of the EU referendum 

Commenting on the announcement, Tim O'Toole, Chief Executive, FirstGroup,  said: "Our trading performance as outlined at the recent full year results in June has continued during the first quarter, and the Group expects to make strong progress in the current year despite a challenging and uncertain trading environment in several of our markets. This will come from our continued focus on disciplined contract bidding and rigorous cost efficiency programmes, as well as lower fuel costs and more First Student operating days compared with the prior year. Overall, we expect to deliver a significant improvement in our profile of sustainable returns and cash generation going forward." 

The third year of First Student's contract pricing programme continues to progress. With approximately two thirds of negotiations completed in the current bid season, the Group are achieving average price increases above the prior year while their contract retention rate is as targeted. 

Early in the first quarter the Group realigned regional management and central service structures, resulting in the elimination of 130 positions, which will assist in meeting their cost efficiency targets for the current year. The Group is on track to benefit from a higher number of operating days and a reduction in fuel costs due to their hedging profile. 

The Group continue to work to offset the driver shortage cost headwinds they are experiencing, and expect significant margin progression in the current year. 

First Transit delivered a solid financial performance in the first quarter, continuing to benefit from growth opportunities in core service markets, as well as exploring additional avenues for future growth. 

Greyhound has continued to experience muted passenger demand in the first quarter, with fuel prices lower than in the comparable period in the prior year. Like-for-like revenue decreased by 5.0% in the first quarter. The Group continues to take actions to reduce cost in response to the demand environment, and to make progress with our business model transformation. 

In the first quarter, First Bus like-for-like revenue decreased by 1.4%, with passenger volumes continuing to be affected by lower high street retail footfall and congestion impairing services in several of our markets. The Group is taking action to offset the challenging market backdrop by merging or closing a number of depots and other cost efficiencies, and expect to deliver margin progression during the current year from the benefits of past cost saving actions, additional cost and operational efficiency initiatives and reduced fuel costs. 

The First Rail division delivered like-for-like passenger revenue growth of 2.3% in the first quarter with volume growth moderating, consistent with recent industry wide trends. This slowdown in growth has been mainly evident on the Great Western Railway (GWR) franchise, where the network infrastructure is undergoing substantial upgrade work. 

Revenue performance at TransPennine Express ('TPE') has been better than the industry average in the quarter. In the recent National Rail Passenger Survey, the rail franchises maintained or improved their customer satisfaction ratings, during a period when the industry average satisfaction score fell.