Aviation division on track to deliver growth despite "adverse impact of foreign exchange fluctuations"
Logistics firm John Menzies is reporting a strong start to the second half of the financial year.
Edinburgh-based Menzies said its aviation division is on track to deliver earnings growth, despite the “adverse impact of foreign exchange fluctuations”.
Menzies said ground handling volumes at its aviation business on a like-for-like basis are up 2.7 per cent though like-for-like cargo volumes fell 7.3 per cent.
However, absolute volumes on an underlying basis were up 2.5 per cent, which the group said reflects the annualisation of contracts won in the previous year.
Menzies reported in full-year results in March its aviation division was now the group's largest profit and cash contributor, generating profits of £39.4 million last year.
Last year the aviation division generated turnover of £676.8 million and secured new contracts with existing customers at 18 new airports, and 50 new contracts overall, which Menzies said would generate revenues of £41 million a year.
For the period covering July 1 to October 31, 2012, Menzies said it had completed its restructuring of the loss-making UK cargo business, having closed four cargo facilities to now operate from a single facility at London Heathrow.
Menzies said the restructuring leaves just one material loss-making cargo operation in Chicago.
Three acquisitions made during the year - Flight Support (UK), Prague Handling (Czech Republic) and Kamino Cargo (Romania) - have now been integrated with existing operations and are “making positive contributions” Menzies said.
The group said Flight Support and Prague Handling were examples of consolidation which “deliver synergies”.
Menzies said “further organic and acquisition growth opportunities exist,” and its management will follow a structured growth plan to enter “new, attractive markets where the division believes there are good growth prospects”.
The group said its distribution arm, focused on newspaper, magazine supply and marketing, is trading “broadly in line with last year”.
Newspaper sales are “ahead of expectations” as a result of cover price increases and new contract wins from News International and DC Thomson.
Decline in magazine sales “are within the range of expectations expected” though weekly titles are proving “particularly challenging”.
Menzies said its “rationalisation” of the division was continuing and major infrastructure changes in the Scottish central belt and Yorkshire are now complete, with further plans now under way in east England.
Menzies said it has recently agreed £75 million of new banking facilities, renewing an existing £50 million facility and a further £25 million facility which runs to 2015.
The group said it has resources to invest “as opportunities arise within either operating division”.