Firstgroup's shares fell 10 per cent this morning despite the FTSE 250 transport firm reporting an increase in revenue and profit for the year to 31 March.
Profit before tax at Firstgroup, which runs the Great Western Railway, increased by 23 per cent to £207m as revenues rose 8.3 per cent to £5.65bn.
The bus and rail operator's share took a beating after it revealed a cautious outlook for the rest of the year saying it faced economic uncertainty in Britain while progress in its North American markets remains steady.
At the time of writing, shares were down down 5.47 per cent at 149.80p.
Following the share fall, Canadian activist investor West Face Capital disclosed a five per cent stake in Firstgroup today.
George Salmon, equity analyst at Hargreaves Lansdown, said:
“It’s been a long journey for Firstgroup, but it finally looks like some progress is being made, in parts of the business at least."The UK bus business still looks weary, and margins in the rail network, soon to include the South West Rail franchise, are falling. However, the outlook in North America is more positive than it has been for some time, and its fleet of yellow school buses is performing well.
"Nonetheless, cost inflation is hanging over the group and there is still no sign of a resumption in dividend payments. Some analysts had been, perhaps wishfully, pencilling in a payout for this year.”
What Firstgroup said:
Tim O’Toole, Firstgroup's chief executive, said: "We are encouraged by this year’s improved financial results, with our largest division First Student delivering a significant margin improvement despite continued driver recruitment challenges, while our First Bus and First Rail operations have faced more challenging market conditions this year.
"Overall this year’s results demonstrate the progress we have made in repositioning FirstGroup to deliver for our customers while creating value for our shareholders."