31st May 2018 09:18
LONDON (Alliance News) - Shares in bus and train operator FirstGroup PLC dropped on Thursday after it said it swung to a loss in its most recent financial year and announced an immediate departure of its chief executive.
Shares in FirstGroup were trading 12% lower at 97.35 pence each early on Thursday, easily the worst performer in the FTSE 250.
The UK and North American transport operator said revenue in the year to the end of March rose 13% to GBP6.4 billion from GBP5.7 billion the prior year, 14% on a constant currency basis. But revenue grew just 1.0% excluding the benefit of its new South Western Railway franchise and a 53rd week to the recent year.
On a divisional basis, First Rail was the best performer during the year, as its revenue grew to GBP2.0 billion, from GBP1.3 billion the year before, reflecting the new franchise, which contributed from August onward.
First Transit revenue was higher year-on-year at GBP1.1 billion, compared with GBP1.0 billion, while First Bus revenue rose to GBP579.4 million from GBP861.7 million.
First Student revenue was broadly flat at GBP1.8 billion.
Although Greyhound grew revenue to GBP690.2 million from GBP684.7 million, it booked an impairment charge of GBP12.3 million on its property, plant and equipment. Moreover, FirstGroup also took a GBP260.6 million impairment of the carrying value of Greyhound goodwill, a GBP2.5 million impairment on the brand and trade name, and a GBP1.9 million impairment on software.
As a result, FirstGroup swung to a GBP326.9 million pretax loss, having reported a GBP152.6 million profit a year earlier. The result reflects a rise in operating profit to GBP6.6 billion from GBP5.4 billion. Meanwhile, finance costs remained flat at GBP132.0 million.
Adjusted pretax profit was GBP197.0 million, down from GBP207.0 million the year before.
Looking ahead, FirstGroup said it expects overall improvement in Road margins and returns, which will result in broadly stable group earnings in constant currency. It also estimates higher cash generation from Road division following what it called disciplined investment.
"In the year, our largest division First Student was broadly stable and First Bus took an encouraging step forward in its margin improvement plans," said Fiannce Head Matthew Gregory.
"This was offset by the cost challenges experienced by First Transit in the first half and by Greyhound’s inability to overcome the structural shift taking place in its long haul markets, as ultra low cost airlines significantly increase capacity and extend into new markets," Gregory added.
In a separate statement, FirstGroup said Chief Executive Officer Tim O'Toole will step down with immediate effect, while Non-Executive Chairman Wolfhart Hauser will become executive chairman until a new CEO is found. FirstGroup said it started the process to select a new CEO.
In addition, Chief Financial Officer Matthew Gregory will become an interim chief operating officer immediately.
"The time is right for me to step aside. Today's results clear the way for the new approach sought by our chairman and the board," said O'Toole.
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