FirstGroup Turns To Profit In FY25, Lifts Dividend, Plans Buyback, Backs Outlook; Stock Gains

FirstGroup Plc reported a pre-tax profit of £164.9 million for fiscal year 2025, a significant turnaround from the prior year's £18.8 million loss, driven by increased revenues and the absence of prior-year pension settlement charges. The company increased its full-year dividend to 6.5 pence per share and announced a new £50 million share buyback program. Looking ahead to fiscal year 2026, FirstGroup anticipates maintaining at least the same level of adjusted earnings per share.

Analysis

FirstGroup Plc has demonstrated a significant financial turnaround in fiscal 2025, reporting a pre-tax profit of £164.9 million, a stark contrast to the £18.8 million pre-tax loss recorded in the prior year. This substantial improvement was primarily attributed to the absence of prior-year pension settlement charges and an increase in annual revenue to £5.07 billion from £4.72 billion. Notably, adjusted earnings per share surged to 19.3 pence from 6.4 pence in fiscal 2024, reflecting enhanced underlying profitability. Reinforcing its commitment to shareholder returns, FirstGroup increased its full-year dividend to 6.5 pence per share, up from 5.5 pence, and simultaneously announced a new £50 million share buyback program. The company's outlook for fiscal 2026 is stable, with expectations to at least maintain the current level of adjusted earnings per share. This positive financial report and outlook triggered a favorable market reaction, with FirstGroup's shares gaining approximately 8% on the London Stock Exchange.

Key Decisions for Investors

• Investors should recognize the robust fiscal 2025 performance, particularly the swing to profitability and significant adjusted EPS growth, as key indicators of FirstGroup's improved financial health and operational execution.
• The announced increase in the full-year dividend to 6.5 pence and the new £50 million share buyback program signal strong management confidence and a commitment to enhancing shareholder value, potentially supporting a bullish stance.
• It is advisable to monitor FirstGroup's ability to meet its fiscal 2026 guidance of at least maintaining adjusted earnings per share, as sustained performance will be crucial for validating the current positive investor sentiment.