The new chairman of John Menzies today said he was pressing ahead with a review of its structure as he vowed to address “historic performance shortfalls” at the logistics group.
Irish packaging tycoon Dermot Smurfit, who took the helm last month, said his review would look at whether the Edinburgh-based firm’s Aviation and Distribution arms “are best placed to prosper while they are part of one group”.
He added: “The situation is complex, particularly with regard to our pension schemes. Management have already engaged with specialist advisers and our pension trustees, and work is underway to structure the pension scheme in such a way as to give the board the maximum amount of flexibility in future. I expect this work to take up to 12 months and we will update shareholders when appropriate.”
Menzies came under fresh pressure last month from a German investor to consider breaking itself up. Shareholder Value Management (SVM) urged the company to separate its Aviation business from the Distribution operation, a move that it claimed “would be immediately and significantly value accretive, and in the interest of all shareholders”.
Smurfit said today: “As shareholders will be aware the group has underperformed in the past and the board is determined to address historic performance shortfalls including a review of the group structure.”
His comments came as Menzies said its pre-tax profits almost halved to £3 million for the six months to the end of June, down from £5.8m a year earlier, on turnover broadly flat at £1 billion.
The drop in profits was blamed on exceptional costs of £10m, including £7.2m relating to a goodwill impairment of assets in its Netherlands cargo business.
However, Menzies hailed the start-up of an Aviation acquisition in Bermuda and the return of stable operations at London Gatwick, while strong sticker sales linked to the Euro 2106 football championships helped its Distribution arm mitigate declines in print media.
It added: “The group continues to make positive progress and the board expects the full-year outturn to be in line with our expectations even before allowing for the positive impact of foreign exchange rates.”
The interim dividend, to be paid on 18 November, was lifted 8 per cent to 5.4p a share.