FirstGroup PLC and Hitachi Ltd on Friday announced a new joint venture focused on strategic decarbonisation.
FirstGroup is an Aberdeen-based transport company, while Hitachi is a Tokyo-based conglomerate with businesses ranging from transportation to telecommunications.
The companies’ 50:50 joint venture NextGen Asset Co Ltd will purchase 1,000 electric bus batteries valued at around £100 million, which will be part of First Bus’s expanding electric bus fleet. Both parties will contribute £10 million each into the JV, with the remainder to be funded by debt.
FirstGroup expects the JV to contribute £3 million per year in adjusted earnings by financial year 2026. The company’s last reported financial year 2023 ended on March 25.
Further, it anticipates around £20 million in savings for its financial 2024 capital expenditure, with future savings of £40 million to financial 2027. FirstGroup expects a financial 2024 year-end adjusted net cash position of £40 million to £50 million, up sharply from a previous guidance of £20 million to £30 million posted in October.
FirstGroup Chief Executive Officer Graham Sutherland said: ‘The pioneering alliance with Hitachi is a major strategic partnership for the group as we progress towards our ambitious 2035 decarbonisation target for our bus fleet. It will allow us to continue the electrification of our fleet and depots with increased efficiency and greater visibility of our financial commitment, and unlike other possible arrangements, we will retain much of the residual value in the batteries as they are taken off our buses. Looking ahead, we are also excited about the possibilities for future value creation as Hitachi ZeroCarbon delivers market leading decarbonisation solutions to transport operators worldwide, leveraging our joint experience.’
Alistair Dormer, executive vice president & general manager of Hitachi’s Green Energy & Mobility Strategic Planning division, said: ‘We continuously strive for growth through collaboration and co-creation with our partners and customers, and this specific partnership enables us to use our innovative technologies and global expertise to help decarbonise fleets efficiently, discover untapped revenue streams, and maximise the residual value of assets.’
FirstGroup shares rose 3.1% to 181.60 pence each in London on Friday morning, while Hitachi shares closed 3.5% higher at JP¥10,400.00 each in Tokyo.
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