Coronavirus: Edinburgh's John Menzies suspends shareholder dividend amid Covid-19 woes

Menzies, which has more than 30,000 employees, was releasing results for 2019 which revealed a fall in profit before tax despite a small rise in turnover. Picture: John Menzies

The group, which last month warned of a multi-million-pound profit blow as a result of Covid-19, said it was “well positioned to manage the short-term issues that exist” with a likely return to growth for this year and beyond.

Menzies, which has more than 30,000 employees, was releasing results for 2019 which revealed a profit before tax of £17.3 million, down from £21.6m a year earlier. Revenues came in at just over £1.3 billion, marginally up on 2018. There was an increase in operating profit to £39.6m from £34m.

Bosses described the 2019 figures as “robust results in a challenging trading environment”, with management taking “decisive actions” during the year to right size the business and position the group for “sustainable growth”.

The group, which is one of Scotland’s oldest companies, dating back to 1833, recently estimated that there was likely to be a profit hit in the current year of between £6m and £9m providing the impact of coronavirus falls towards the end of the second quarter.

Executive chairman Philipp Joeinig told investors: “We are currently experiencing some headwinds due to the impact of Covid-19 on our activities but in the medium and long term we see genuine opportunities for growth.

“In 2020, we have two goals. Firstly, a significant reduction in our leverage position by the end of the year through focusing on cash and capital expenditure management. Secondly, to achieve continued growth by expanding our services to support customer growth and by moving into new higher yielding markets.

“With the investment we have made in our people this year, I am confident we have the right team to deliver.”

Right-sizing

Chief executive Giles Wilson added: “Last year, we said we would be ‘fit for 2020’ by doing five things: right-sizing the business, fixing underperforming operations, improving customer engagement, investing in our team and targeting higher margin business.

“We’ve delivered on all five thanks to the hard work of all our colleagues. We now have the right team and the right structure that puts us in a strong position to seize the opportunities in this structural growth aviation market.

“As we start 2020, our short-term focus is on strengthening the balance sheet and I have put in place a number of measures that I believe will make a material difference during the year.”

The group, a household name once famous for its high street stores and fleet of vans and drivers distributing newspapers across the UK, became a pure aviation business after selling its newsprint distribution division to a private equity firm.

Shore Capital analyst Robin Speakman noted: “The decision to suspend the dividend is one which we support, conserving cash in the short term to focus on de-gearing, highlighting the underlying cash generation potential of the group.

“Looking to the long term, we retain a ‘buy’ stance reflecting the long-term potential and outlook.”