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GWR and SWR owner FirstGroup appoints new CEO as it announces fall in rail profits

FirstGroup has named Matthew Gregory as its new chief executive as it revealed widening half-year losses and warned about the profitability of its rail franchises.

Gregory has been the interim chief operating officer at the bus and rail provider (responsible for the Great Western Railway and South Western Railway franchises) since May 2018, alongside his role as chief financial officer which he has held since 2015.

Gregory replaces former boss Tim O’Toole who resigned in May following the announcement of a full-year loss, and the interim chief executive Wolfhart Hauser will revert back to his non-executive chairman role.

Gregory said: “It’s a great honour to lead FirstGroup and our 100,000 employees who are relied upon by millions of customers across the UK and North America each day.

“I believe we are now in a better position to make the most of our opportunities and create a stronger business for the future.

Hauser praised Gregory’s “strong leadership skills and strategic decisiveness,” and said the board had unanimously concluded that he was the right person for the role.

The appointment comes as the company reported interim pre-tax losses widening to £4.6m in the six months leading up to 30 September, increasing from £1.9m the year before and despite its revenue rising 19% to £3.3bn.

FirstGroup’s rail division saw its unadjusted operating profit fall from £30.2m to £27.5m, even as revenue increase by 80% to £1.2bn.

Whilst the operating profit was partially offset due to the costs of the withdrawal of its Greyhound services in Western Canada, the rail division dropped by 5.8% to £29.3m.

The company cited “macroeconomic uncertainty, infrastructure upgrade works across our networks, and the industrial action in SWR” as some of the causes, and confirmed that due to the postponed winter timetable upgrade it was in talks with the DfT “to work through potential commercial and contractual amendments” regarding SWR.

The company said that SWR has “experienced challenging trading with issues relating to infrastructure reliability, industrial relations and the effects of the revenue protection mechanisms included in the franchise.”

Responding to the figures, Matthew Gregory said: “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.

“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.”

Image credit - Sterling750

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