FIRSTGROUP has parted company with chief executive Tim O’Toole amid indications of boardroom tension at the transport giant, which has been facing big challenges.
The Scottish company said Mr O’Toole stepped down as chief executive with immediate effect yesterday after eight years in charge.
Shares in the group plunged 19 per cent yesterday when FirstGroup posted a £327 million loss after slashing the valuation of its Greyhound coach business in the USA.
“The time is right for me to step aside,” said Mr O’Toole. “Today’s results clear the way for the new approach sought by our Chairman and the Board.”
FirstGroup’s chairman Wolfhart Hauser will take on executive responsibilities until a replacement for Mr O’Toole is appointed.
“This year’s results fell short of our ambitions,” said Mr Hauser. “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.”
He added: “The Board is examining all appropriate means to mobilise the considerable value inherent in the Group.”
In April FirstGroup spurned a bid approach from US investment firm Apollo which it said fundamentally undervalued the company.
In the results announcement FirstGroup highlighted the challenges faced by the Greyhound business, severe weather effects on both sides of the Atlantic in the final quarter and ongoing US driver shortages.
These were partially offset by good performances in UK divisions in the year.
First Bus grew revenues by 1% helped by growth in passenger numbers. The group said its First Rail business achieved solid divisional profitability with contributions by Great Western Railway and South West Rail, partially offset by a small loss for the TransPennine Express operation.
The results underlined the scale of the challenges FirstGroup is facing in the US, after writing £277m off the value of the Greyhound business in the latest year.
Chief financial officer Matthew Gregory noted Greyhound’s inability to overcome the structural shift taking place in its long haul markets, as ultra low cost airlines significantly increase capacity and add routes. The group said ongoing increases in fleet maintenance and driver costs had resulted in a significant reduction in Greyhound’s margin.
The First Transit bus operation lost high margin Canadian oil sands business and faced ongoing cost pressure from driver shortages.
In the UK, like-for-like passenger revenue growth in First Bus accelerated in each quarter, in spite of bad weather forcing some shut downs.
Rail passenger revenue growth accelerated on a like-for-like basis. Growth in TransPennine Express passenger numbers has been below expectations.
Underlying operating profits fell 10.4% in the year to 31 March, to £317m. The pre-tax loss of £327m compared with £153m profit in the preceding year.
FirstGroup shares closed down 21p at 89.8p.
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