FirstGroup plc (LSE: FGP) and Hitachi Ltd announced a new 50:50 joint venture on Friday focused on accelerating the decarbonisation of FirstGroup’s bus fleet.
The joint venture, called NextGen Asset Co Ltd, will purchase 1,000 electric bus batteries valued at around £100 million which will expand FirstGroup’s fleet of electric buses. Each company will contribute £10 million initially, with the remainder funded by debt.
FirstGroup expects the joint venture to contribute £3 million in adjusted earnings by 2026. It also forecasts around £20 million in capital expenditure savings for 2024, rising to £40 million through 2027. FirstGroup now expects 2024 adjusted net cash of £40-£50 million, up from £20-£30 million. CEO Graham Sutherland said the “pioneering alliance” will allow FirstGroup to electrify its fleet efficiently while retaining residual battery value.
Alistair Dormer of Hitachi said the partnership enables Hitachi to help decarbonise fleets, find new revenue streams, and maximize asset residual value. FirstGroup shares rose 3.1% while Hitachi closed 3.5% higher on the news. FirstGroup shares are up 76% year-to-date and 87% over the last year.