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Investing.com -- FirstGroup PLC (LON:FGP) on Tuesday reported a 16% increase in adjusted earnings per share to 9.9p for the first half of fiscal 2026, despite a 4% drop in underlying passenger volumes in its bus operations.
Shares fell 14.2% as investors reacted negatively to the passenger decline and free cash outflow.
The UK transportation operator saw adjusted revenue rise 30% to £833.6m, primarily driven by the contribution of First Bus London acquired in February 2025, while adjusted operating profit edged up slightly to £103.6m.
However, commercial bus passenger volumes fell 7%, only partially offset by a 4% increase in concessionary volumes, reflecting what the company described as "the transition to the £3 fare cap, lower consumer confidence and some modal shift to other transport modes."
"We have delivered a robust performance in H1 2026, made further progress in growing and diversifying the business and maintained our positive earnings trajectory," said Graham Sutherland, Chief Executive Officer. "In the second half, we will benefit from the actions we have taken to restructure the business."
The company reported a free cash outflow of £35.6m before acquisitions and returns, primarily due to accelerated investment in First Bus electrification. FirstGroup has approximately 1,280 zero-emission buses in operation, representing about 23% of its fleet.
FirstGroup declared an interim dividend of 2.2p per share, up from 1.7p in the prior year, and completed a £50m share buyback program in October 2025. The company expects modest growth in adjusted earnings per share for the full year and anticipates year-end adjusted net debt of £125m-135m.