Troubled bus and trains outfit FirstGroup PLC (LON:FGP) has promoted chief financial officer (CFO) Matthew Gregory to the role of chief executive officer (CEO).
The decision will allow chairman Wolfhart Hauser to give up the executive duties he assumed when previous CEO Tim O’Toole jumped – or was pushed – off the bus back in late May.
READ FirstGroup drops as it replaces its chief executive after profits fall
Since O’Toole’s departure, Gregory has been acting as the interim chief operating officer. Now he has moved up to the CEO position, Nick Chevis, who is director of finance, will become interim CFO with immediate effect.
Top investor in #FirstGroup calls for board to step down https://t.co/LufmGM2RDq
— The GrumpNow App (@GrumpNow) November 11, 2018
The announcement coincided with the release of the Greyhound bus company owner's half-year results covering the six months to the end of September.
Revenue rose by 19.2% to £3.30bn from £2.77bn in the corresponding period of 2017.
Headline profit before tax was up 37.7%, or by 63.4% on a constant currency basis, to £42.0mln from £30.5mln the year before.
FirstGroup PLC - #FGP
Half-year Report
revenue +19% (fy ~ £6.5 bill)
EPS 2.9p (adj), -0.6p (stat)
market cap = 959 mill
zero shareholder net profit for 4+ years
=> watch pic.twitter.com/cGJRi0Jt1E
— artificial intelligence investor (@dlefcoe) November 13, 2018
Net debt had eased at the end of the period to £1.05bn from £1.18bn a year earlier.
The group said it has completed the review of its troublesome Greyhound bus division and has launched a plan to revitalise what is the smallest part of the company’s business.
"We have made good progress in the first half delivering on our plans to strengthen the group, generating sustained cash flow to further reduce leverage and deploy to targeted growth,” said Gregory, in his first set of results as CEO.
“First Student's bid season success will see our largest business return to growth as planned while maintaining our disciplined approach to pricing. In September, First Bus completed the roll-out of contactless payment across the UK on schedule, becoming the first of the UK's principal bus operators to do so. Together with other revenue and cost actions, this helped First Bus to achieve strong margin improvement in the period.
“Meanwhile 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,” he added.
Conditions in the industry remain difficult but Gregory said the board remained confident in achieving full-year expectations.
Broker Liberum, which rates the shares a ‘buy’, said it was an encouraging set of interims.
“There were good improvements in margins and profits at First Student and UK Bus, and progress at Transit. UK Rail posted lower profits as expected, and we see the outlook as challenging; however, 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,” the broker said.
“Overall, there was some evidence of progress in the figures, but we see organic turnarounds at the divisional level as carrying high execution risk in aggregate, but more radical action on the portfolio appears to not be forthcoming,” it added.
The shares were among the best performers in the first hour of trading, rising 7% to 85.25p.