John Menzies sees revenues fly up 10%

JOHN Menzies, the aviation services and distribution group, said today that revenues in the first half of the year were ten per cent ahead of last year.

The Edinburgh-based firm saw revenues grow to £826.5m in the six months to June 28, compared to £749.6m in the same period last year.

It said that much of the growth came from its aviation arm, which secured 27 new contracts in the first half.

Its distribution operation continued the "stable" performance it achieved throughout 2007.

Overall pre-tax profits fell by 21 per cent to £11.3 million in the first half, although the decline was largely blamed on start-up costs of £3.5m associated with its organic growth.

William Thomson, the company's chairman, said: "The group continues to follow its strategy of selectively growing Menzies Aviation while maintaining earnings from Menzies Distribution.

"At Menzies Aviation, the focus on creating regional densities by targeting attractive airlines in attractive markets has been invaluable as our airline customers face unprecedented challenges."

Menzies Aviation is now one of the world's leading suppliers of ground handling services to the aviation sector. It employs 16,500 people and operates at 113 airports in 27 countries.

Mr Thomson said that the aviation arm had succeeded in winning a number of new contracts and successfully started major new operations in India and South Africa.

Revenues from aviation increased by 31 per cent in the period, while return on sales fell from 3.7 per cent in the first half of 2007 to 2.9 per cent in the first six months of 2008.

At Menzies Distribution, the stability achieved during 2007 has continued, the company said. "The division continues to drive down costs through productivity initiatives," said Mr Thomson. "Good progress has been made on new revenue ventures and we have successfully entered the market in the Republic of Ireland."

In line with last year, the distribution arm delivered an underlying profit of £10.9m, with like-for-like sales of magazines down year-on-year, while newspaper like-for-like sales were marginally ahead.

Looking ahead to the rest of the year, the company said that the marketplace for the aviation industry is "very challenging" and it expected the conditions to continue into next year with pressure on cargo volumes and flight schedules.

But the firm has increased its geographic diversifaction and its focus on "attractive airlines in attractive markets" remains resilient.

It said it will take a hit this year from the costs of "decisive management actions" in response to current market conditions but added that the benefits of the costs will be realised in 2009.