FirstGroup hires new boss amid widening losses and rail woes
Transport giant FirstGroup has appointed a new chief executive as it revealed widening half-year losses and warned over earnings in its rail division.
The group, behind strike-hit line South Western Railway, said interim chief operating officer Matthew Gregory had taken on the top job with immediate effect.
His appointment comes after former boss Tim O’Toole resigned abruptly in May following results showing the group swung to a mammoth full-year loss.
Executive chairman Wolfhart Hauser had taken over at the helm after Mr O’Toole’s departure, but will now revert back to his non-executive chairman role.
Details of the change at the top came as FirstGroup reported interim pre-tax losses widening to £4.6 million in the six months to September 30 from £1.9 million a year earlier due to restructuring and reorganisation costs from the withdrawal of Greyhound services in Western Canada.
But revenues rose 19.2% to £3.3 billion and on an underlying and constant currency basis, FirstGroup saw pre-tax profits jump 63.4% to £42 million, while earnings lifted 9.2% to £92.4 million.
FirstGroup shares rose 6% in morning trading.
But FirstGroup cautioned its rail arm, which includes the South Western Railway (SWR) and Great Western Railway franchises, would see annual underlying operating profits fall year-on-year.
Half-year underlying rail earnings dropped 5.8% to £29.3 million.
On the rail performance, FirstGroup said: “Industry conditions remain very challenging with macroeconomic uncertainty, infrastructure upgrade works across our networks and the industrial action in SWR all affecting our franchise performance levels.”
Due to a postponed winter timetable upgrade, the firm said it was in talks with the Department for Transport “to work through potential commercial and contractual amendments”.
The group’s overall performance has been weighed down by woes at its Greyhound bus service in the US, which has been struggling amid the rising popularity of low-cost airline competition.
Greyhound’s interim underlying operating profits more than halved to £10.2 million from £23.5 million a year ago.
But the firm said its group-wide performance was “encouraging” in the first half and maintained its overall outlook for the full-year.
New boss Mr Gregory said: “Our First Rail operations continued to focus on improving services for our passengers while maintaining overall profitability in a more challenging industry environment during the period.
“We completed our review of Greyhound and have launched a plan to optimise our smallest business for the challenges it is facing.
“Having recently addressed our loss-making activities in Western Canada, these further actions will assist in improving Greyhound’s performance going forward.”
Gerald Khoo, a transport analyst at Liberum, said there was “some evidence of progress in the figures”.
But he added: “Greyhound continued to deteriorate and the outcome of the strategic review may disappoint, with a continued focus on organic turnaround rather than anything more radical.”