- It lost £327m in the year to the end of March from profit of £152.6m last year
- It also announced the immediate departure of chief executive Tim O’Toole
Shares in FirstGroup fell as much as 13 per cent today after the company slumped to a loss and dumped its chief executive.
The company, which owns Great Western Railway and US bus operator Greyhound, said it lost £327million in the year to the end of March. That compares to profit of £152.6million last year.
It also announced the immediate departure of chief executive Tim O’Toole, who is being replaced by Wolfhart Hauser, who will become executive chairman.
Loss: FirstGroup made a £327million loss in the year to the end of March
Matthew Gregory, the chief financial officer, will also take on the duties of chief operating officer. These changes will stay in effect until a replacement for O’Toole has been found.
O’Toole’s departure after nearly seven years at the helm comes as, under his leadership, the company rejected two approaches from a private equity firm earlier this year.
Shares in the FTSE 250-listed company were down 11.7 per cent at 97.75p in morning trading.
‘This year’s results fell short of our ambitions – we are disappointed that we did not make the further progress we intended based on the trends we saw at the end of the previous financial year,’ said Hauser.
First Group was dragged down by a £277million impairment charged linked to Greyhound bus service.
America’s famous 104-year-old bus service has seen declining sales, which FirstGroup said were down to the rising popularity of low-cost airline competition.
For this reason, it has commissioned a review of the business which could result in a sale.
The group said: ‘Greyhound’s significant short haul and express growth was more than offset by declines in long haul demand as a result of intensifying competition from the ultra low cost airlines, which are bringing significant additional aircraft capacity into operation while also connecting to a growing number of secondary airports.’
AJ Bell investment director Russ Mould commented: ‘If FirstGroup was looking for validation for its decision to rebuff a bid from US private equity firm Apollo then today’s results do nothing to provide it.
‘In fact, its erstwhile suitor may be thinking it dodged a bullet after the group reported a loss for the year to 31 March 2018 and announced that chief executive Tim O’Toole is stepping down with immediate effect.
‘O’Toole, a former head of the London Underground, is departing after nearly seven years in the role. If the share price is used as an arbiter, then his tenure can hardly be counted as a success with its market value less than a third of what it was when he joined.’