FirstGroup CEO Tim O’Toole has been sacked by the board and placed on three months garden leave, as the firm posted a dismal set of figures.
It comes just weeks after the board rejected a cut-price takeover bid by equity firm Apollo [routeone/News/9 May], but now it has effectively put itself up for sale by announcing that it will consider bids for all or part of the business.
Until a new CEO is found, Chairman Wolfhart Hauser takes on the interim role of Executive Chairman, while Chief Financial Officer Matthew Gregory adds the interim role of Chief Operating Officer to his duties.
Reporting a £327m loss for the year to 31 March, compared with a £152m profit in 2017, it has blamed an impairment on its USA Greyhound business – mainly due to intense low-cost airline competition – and “onerous contract provision” at its TransPennine Express rail franchise. The group employees 100,000 people worldwide.
While revenue rose by 13% to £6.4bn, operating profit dipped by 6.5% to £317m (2017: £339m) and its margin fell from 6% to 5%.
More than half its revenue (55%) is derived from its Greyhound, First Student and First Transit businesses in the USA, with UK Rail accounting for 32% and UK Bus 13%.
The UK bus operations improved performance, with revenue up by 2.1%, with 1.1% passenger growth and margins improved from 4.3% to 5.7%. First says: “In the year ahead we expect to sustain the volume growth and margin improvement momentum we have delivered in the 2017/18 year.”
Mr O’Toole joined FirstGroup in June 2010, taking over from founder Sir Moir Lockhead. He had a good track record of turnaround roles, latterly with London Underground and previously Conrail, USA.
FirstGroup has struggled since having to raise £615m via a rights issue in 2013 to tackle its £2bn debt burden, with dividends being sharply cut, then axed. This year it cut its net debt by 17% to £1.1bn.
It was the end result of Sir Moir’s $3.5bn top-of-the-market purchase of Laidlaw in 2001, which gave it half the lucrative USA school bus market.
At the time Greyhound, which came with Laidlaw, was intended to be sold on but this was blocked by Sir Moir – even when Stagecoach offered $750m for it – and the group never recovered from its USA problems.
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