Menzies still on target for delivering growth plan

LOGISTICS: Group moving forward after Gatwick contract problem affected figures

Scottish support services group John Menzies said its strategy remained on track despite posting a lower pre-tax profit and dip in revenue for 2015.

Profit before tax fell by almost 30% to £18.2 million, and revenue was trimmed by 0.33% to £1,993.3m.

The Edinburgh-based group was hit by operational issues involving a key contract at Gatwick Airport, which forced Menzies into issuing a profit warning in November.

Menzies Aviation provides passenger, ramp and cargo services, and setting aside the Gatwick contract revenue in the division increased.

Performance outside the UK was good, with strong cargo handling volumes and ground handling hub contract wins.

The biggest gain was Norwegian Air Shuttle’s hub in Oslo and its major base in Copenhagen, with both operations starting in April.

Menzies Aviation now handles some 52,000 flights in 11 locations with Norwegian.

Its United Airlines operations in the USA was expanded with new bases in Lubbock, Cincinnati, Tucson and Wichita. This year the division will handle 126,000 flights for United from 34 locations.

Menzies Distribution, traditionally known for overnight deliveries of newspapers and magazines, performed in line with expectations.

The distribution network was restructured and new contracts won in the wider logistics market, expanding its revenue base.

It last month bought Thistle Couriers of Aberdeen to give penetration into Scotland’s harder-to-reach areas.

Iain Napier, chairman of John Menzies plc, said: “Our updated strategy for both divisions is now embedded and we are making good progress towards our stated objectives.

“However, 2015 was a challenging year for the group with operational issues at London Gatwick suppressing profits.

“Outside of the UK, the aviation business continued to make progress.

“Menzies Distribution performed strongly, whereby print media decline was fully mitigated.

“Our expansion into the e-commerce fulfilment market gained real traction with the acquisitions of AJG Parcels and Oban Express, and a number of new contract wins. The board is confident we have strategies available to us in both of our operating divisions capable of delivering growth.”

The company will pay an 11.8 pence final dividend, taking its total dividend to 16.8p, up 4.0% year-on-year.

Menzies Distribution is one of the UK’s major operators.