FirstGroup Reports Strong FY 2026 Results, Announces £100m Buyback and Growth in Bus and Rail

First Bus was the star performer in FY 2026 despite some nasty headwinds

First Bus did the heavy lifting. Revenue jumped 33% to £1,443.6 million, while adjusted operating profit rose 7% to £102.8 million.

That is impressive because the division had to absorb a £26 million decrease in fare funding, lower passenger volumes, and about £15 million of higher employer National Insurance costs. In plain English, the bus business had several things going against it and still managed to grow profit.

Not everything was rosy. Regional Bus passenger volumes fell 3% to 390.4 million, with commercial volumes down 6%. FirstGroup says the move to the £3 fare cap and weaker consumer confidence were major factors.

Even so, operational performance improved. Lost mileage fell to 1.5% from 1.8%, and Net Promoter Score rose to 17 from 11. That matters because better reliability usually feeds through into stronger demand and contract wins later on.

The other big point is diversification. Franchising revenue reached £322.2 million, including £310 million from First Bus London, while Business and Coach revenue rose 28% to £230.1 million. This makes First Bus less dependent on the old-fashioned regional bus model alone.

First Rail profit dipped, but the long-term rail growth story is still intact

First Rail was more mixed. Adjusted revenue fell to £272.4 million from £288.8 million, while adjusted operating profit dropped to £129.9 million from £148.8 million.

There were clear reasons for that. South Western Railway transferred to the DfT Operator in May 2025, open access rail absorbed £6.3 million of Stirling mobilisation costs, and Lumo faced a c.£2 million increase in infrastructure charges. There was also more competition and pricing pressure on the East Coast Main Line.

This is where the numbers need a bit of context. FirstGroup’s adjusted revenue strips out a lot of Department for Transport train operating company revenue where it takes little real risk. So when the company says it is moving to a “higher quality earnings base”, it means less pass-through, low-risk contract income and more earnings from operations where it has real commercial exposure and upside.

Open access – rail services where the operator takes the revenue risk rather than the government – still grew passenger journeys to 3.1 million from 2.9 million. Revenue rose to £109.3 million, although open access adjusted operating profit fell to £25.6 million from £34.1 million.

The medium-term growth case is interesting. FirstGroup says it is on course to more than double open access capacity over the next two to three years, with the Lumo Stirling route, Carmarthen plans, and more applications under review. It also won the London Overground contract, which is expected to contribute c.£300 million of annual revenue in FY 2027.

Cash flow, debt and electrification investment tell the real story

Cash flow was good, though not quite as strong as last year. Free cash flow came in at £73.8 million, down from £113.5 million. That reflects heavy investment and acquisitions rather than a business running out of steam.

FirstGroup spent £253.0 million on capital expenditure and made £35.3 million of acquisitions during the year. Much of that spending went into First Bus electrification, where net capital expenditure reached £188.2 million.

This is one of the more interesting bits of the story. By March 2026, 26% of the UK bus fleet was zero emission, with four fully electric depots and 17 more substantially electrified. That is expensive upfront, but it should improve efficiency and could open up extra revenue streams through third-party charging and energy storage.

Adjusted net debt increased to £137.7 million from £86.9 million, so leverage moved the wrong way. Still, it is not flashing red, especially given the investment programme and the company’s funding headroom.

FirstGroup FY 2027 outlook: steady EPS, better earnings quality, and more rail change

The FY 2027 guidance is steady rather than explosive. FirstGroup expects to maintain adjusted EPS in FY 2027, which is a touch underwhelming after such strong top-line growth in FY 2026.

But there is a fair point behind that caution. More DfT rail contracts are rolling off, including GWR on 13 December 2026, while newer open access routes and London Overground need time to ramp up. In other words, 2027 looks like a transition year rather than a peak year.

On the bus side, revenue is expected to rise to just over £1.5 billion, with further progress in adjusted operating profit. In rail, open access revenue is guided at c.£130 million to £150 million, with adjusted operating profit margins expected to progress to the mid-teens after the ramp-up period.

What this FirstGroup results announcement means for retail investors

My take is broadly positive. FirstGroup is executing well in buses, building a more diversified UK transport business, and returning serious cash to shareholders.

The negative angle is that profit growth is not yet keeping up with revenue growth, and rail still has some moving parts. Competition in open access is real, and the transfer of government rail contracts means some income streams are disappearing.

Still, this looks like a business that knows where it is going. If management delivers the promised c.£400 million of free cash generation over three years, while growing bus earnings and scaling open access rail, there should be more value to come. For now, this is not a blowout set of results – but it is a confident, shareholder-friendly one.