Menzies Warns of Troubled Times Ahead
Newspaper distributor and airport services firm John Menzies - which has an operation at Birmingham International Airport - yesterday warned that its performance this year could suffer from tough trading in its key distribution unit, hitting its shares.
Menzies's pretax profit before exceptional items rose to pounds 36.1 million on turnover up two per cent to pounds 1.39 billion.
Underlying profit rose 20 per cent in 2005, benefiting from strong weekly magazine sales and cost savings.
"But since the start of the year, Menzies Distribution has experienced very tough markets and, even with intensified cost reduction initiatives, the division's performance will fall short of last year if current trends continue," it said.
Chief executive Patrick Macdonald said the group was "implementing strategic initiatives to address the current market challenges".
Sales at Distribution were flat at pounds 1.1 billion.
Menzies said its aviation division had performed well, helped by recent contract wins and acquisitions, with sales up ten per cent to pounds 286 million.
Ground handling revenues were ahead 19 per cent in line with volumes. Cargo revenues were flat, with volumes on a like-for-like basis up 2.4 per cent after adjusting for the group's exit from a major cargo handling contract as part of the restructuring of warehouses at Heathrow.
Mr Macdonald said: "In Menzies Aviation, we are well placed to grow this business. …