FirstGroup revealed an underwhelming set of full-year figures, and the management shake-up is a sign of the firm’s poor performance.

Revenue, excluding South West Rail (SWR) sales, grew by 1% to £6.389 billion – in-line with analysts’ estimates. Pre-tax profits declined by 4.8% to £197 million, while equity analysts surveyed by Reuters were anticipating £199 million.

These figures add to a long line of sub-par updates, and until investors start to see a turnaround in the numbers, they could remain cautious. The stock is down 13%.

Tim O’Toole will be stepping down as FirstGroup CEO with immediate effect. The chairman, Wolfhart Hauser, will become the executive chairman.

Matthew Gregory, the CFO has been appointed the COO with immediate effect, and will continue to carry out his duties as CFO.

It was reported during the week that Mr O’ Toole was on thin ice, so this announcement wasn’t a major surprise. The change in management is likely to shake investor confidence in the near-term. Dealers might be sceptical to buy into the firm while it is searching for a new CEO.

The road division is still FirstGroup's biggest earner as losses on the TransPennine Express franchise took some of the shine off the good SWR figures. The company confirmed it will carry out an extensive review of the Greyhound business model, and will conclude the evaluation in the coming months. The group predicts ‘broadly stable’ earning in the year ahead.

FirstGroup have been muddling along since 2013 – when it raised £615 million from a rights issue, and it hasn’t paid a dividend since then.

The company had a mediocre first-half, as adjusted operating profit was flat, revenue rose by 8.1%, but when you strip-out ticket sales from the newly acquired South West Rail franchise, it only grew by 0.9%. The firm will need to undergo major restructuring in order to turn itself around.

In April, FirstGroup was approached by Apollo, the US private equity firm, and this gave shareholders some hope as it could have brought about radical change. There was speculation the buy-out company would break-up FirstGroup. The approach from the US company was rejected and then they withdrew their offer.

West Face, a Canadian investment company own a 2.5% stake in the firm. They too have been critical of FirstGroup’s management and have been pushing for operational changes. The Canadian firm described the management team as ‘unambitious’ and pointed out they own a relatively small amount of shares in the company ,and have little motivation to bring about drastic change.

Greyhound, the US business, is feeling the pain at both ends as costs are rising and passenger numbers are falling. Due to the strong labour market the company is finding it difficult to get new staff, and it is likely they will have to offer more attractive salaries in order to maintain the workforce. Given the rude health the US jobs markets is in, this trend is likely to continue.

The intense competition between airlines in the US has made air travel more affordable, and fewer people are taking long-haul coach services as a result. The iconic Greyhound brand is seeing more of its customer base taking to the skies.

FirstGroup are keeping an eye on ticket prices, and trying to enhance the service at the same time, but when budget airlines are now your competition, it will be a difficult battle.

David Madden is a market analyst at CMC Markets UK