Menzies hails ‘positive’ trade ahead of DX tie-up

Menzies reported a 12% rise in revenues at its aviation arm. Picture: Contributed
Menzies reported a 12% rise in revenues at its aviation arm. Picture: Contributed
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Edinburgh-based logistics group John Menzies today reported a “positive start” to its new financial year as its distribution arm presses ahead with a reverse takeover of parcels business DX Group.

Shareholders controlling about 18 per cent of DX last week voiced their opposition to the deal, but Menzies chairman Dermot Smurfit said the group was confident of completing the tie-up this summer.

• READ MORE: DX shareholders voice opposition to Menzies deal

In a trading update ahead of the baggage handler and newspaper distributor’s annual meeting, Smurfit said its aviation arm continued to “trade strongly”, with revenues growth of 12 per cent on a constant currency basis during the first four months of the year.

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The business has been bolstered by recent contract wins with Cathay Pacific and Jet2 in the UK, and Virgin America and Frontier on the other side of the Atlantic, while a joint venture with Oman Air is due to start in the second half of the year, serving nine airports across Oman.

Earlier this year, Menzies completed its “transformational” $202 million (£157m) takeover of US aviation services outfit ASIG, and the firm told investors that customer reaction to the acquisition “has been positive and the pipeline of opportunities remains strong”.

Although overall sales at the group’s distribution operation were down 3.1 per cent, following a sharper-than-expected decline in the magazines market, it said the business was performing in line with expectations.

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Within its retail logistics arm, Menzies has secured a contract with NHS Scotland, collecting stock from its national distribution centre in Larkhall, South Lanarkshire, to serve hospitals across all of the regional health boards throughout the country.

“This contract commenced successfully on 1 April and builds on the national WH Smith contract which commenced in 2016,” it said.

“Our entry into this market is being viewed favourably and the commercial team are following a number of opportunities.”

Smurfit told shareholders: “I am very pleased at the progress made so far this year. The integration of ASIG is progressing well and I am confident we will be able to deliver on a deal to combine the businesses of DX and Menzies Distribution.

“Our aviation business continues to trade strongly. The opportunities that exist to cross sell our new product lines and also to expand into new markets are very exciting and your board looks to the future with increasing confidence.”

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