FirstGroup PLC (LSE:FGP) shares dropped 10% to a six-month low of 180p as the transport group reported solid interim results but flagged a transitional period and free cash outflow.
Adjusted revenue rose 30% to £833.6 million in the six months to 27 September 2025, supported by growth in bus operations, contributions from First Bus London, and progress in First Rail services. Adjusted operating profit edged up to £103.6 million, with recent acquisitions and efficiencies partly offset by increased National Insurance costs and the end of the South Western Railway contract.
Adjusted earnings per share rose 16% to 9.9p, helped by the repurchase of 22 million shares. However, a free cash outflow of £35.6 million, driven by accelerated investment in bus electrification, weighed on sentiment.
The company maintained its full-year guidance for modest adjusted EPS growth and declared an interim dividend of 2.2p per share.
Broker Peel Hunt said adjusted operating profit beat forecasts, driven by stronger rail performance, though bus earnings came in slightly below expectations.
"Guidance for FY26 is unchanged, other than net debt, which was higher than we expected at the end of September, largely due to M&A and bus investment, and which the group now expects to be £125-135 million at year-end (previously £120-130 million).
"Guidance for FY27 is to at least maintain EPS, which may be a little below our forecasts."