FirstGroup plc (LON: FGP) have seen their shares in red, as the firm updated shareholders on Monday on a potential North American sale.
FirstGroup plc is a British multi-national transport group, based in Aberdeen, Scotland. The company operates transport services in the United Kingdom, Ireland, Canada and the United States.
Shares of FirstGroup fell 0.76% to 117p. 16/12/19 10:43BST.
FirstGroup have seen a turbulent 2019, at the end of May, the firm reported that they were looking to sell their Greyhound buses business in the US, which saw shares slump.
In November, the firm once again saw their shares crash as their interim loss was widened. The FTSE250 listed travel operator reported a pretax loss of £187.1 million for the six months to September, from just £4.6 million a year ago.
Today, the firm said said it has been conducting a strategic review of its North American businesses First Student and First Transit and will “formally explore all options” including a potential sale.
“We are actively addressing the cost base of First Bus through a comprehensive efficiency programme, the results of which will be substantially more evident in the second half of the year and beyond. Therefore, the board determined that greater value will be achieved by delivering this margin enhancement prior to any launch of a formal sale process,” the company said in a statement.
Matthew Gregory, FirstGroup chief executive said: “We have taken a number of important steps that will enable a rationalisation of the group’s portfolio. Today’s announcement to formally explore all options to maximise value from our North American businesses reflects the resolute focus of the entire board on realising value for all shareholders.”
In the six months to September 30, First Student generated revenue of £851.6 million, up from £775.2 million a year ago. First Transit revenue increased to £588.7 million in the period from £519.6 million.
Additionally, First Bus recorded revenue of GBP424.5 million, down from GBP433.9 million a year before.
Back in November, 10% shareholder Coast Capital Management LP asked FirstGroup to commit to a strategic review of its US businesses.
Coast said: “Coast Capital agrees that there are no synergies between the UK and US assets of FirstGroup, and that a sale of the US assets would not only release meaningful value for shareholders, but would also allow these businesses and their invaluable employees and managers to thrive under a well-capitalized owner which would focus on technological developments, growth of operations, and employee participation in the divisions’ success.”
Shareholders of FirstGroup may have worries considering the slow performance the firm has seen across 2019.
Rival National Express Group PLC (LON: NEX) posted bumper fundamentals for the three month period ended 30 September 2019, which it said owed to significant contract wins.
The Company booked impressive profit growth of 14.3%, which was led by a 14.5% bounce in revenues. It added that its operating margin was ‘up’ during the period.
Additionally, rival Stagecoach (LON:SGC) saw its revenue slip in its half year results on Wednesday, also announcing changes to its board.
Stagecoach said in its half year results that revenue dropped to £800.2 million, compared to the £1.01 billion figure recorded during the first half of the year prior.
In a time where rival firms such as Go-Ahead Group plc are improving, it seems that the board will have to make a consideration of operational and structural management to turn fortunes around.
