Edinburgh's John Menzies flags 'number of business opportunities' as pandemic recovery gathers pace
Releasing a trading update ahead of its interim results at the start of September, the firm pointed to “regional variations” as international travel continues to be disrupted by the pandemic.
Ground services in Europe were described as being particularly weak though this has been offset by “encouraging” trading elsewhere driven by new business gains, a “generally strong performance” within air cargo services, “extremely tight” cost management and additional support from government schemes.
Overall, the group is trading slightly ahead of current market expectations.
As of the end of June, total liquidity stood at £179 million leaving the group with “significant headroom to allow us to deliver on our strategic priorities”.
Menzies told investors: “Commercially, the first six months of the year has been very strong and significantly ahead of last year.
“In May we commenced a new air cargo services contract for Avianca Airlines in Miami, US, which is the largest single air cargo services contract the group has ever secured. Operations have started very well and we are delivering enhanced service levels to our customer.”
The firm said it was continuing to “pursue our strategic priorities” and had a “number of business development opportunities in play”.
Bosses also highlighted a recent deal to acquire a minority stake in a joint venture at one of the world’s busiest cargo airports – marking its first significant venture in mainland China.
“Further opportunities exist across all product categories with a good geographical spread,” Menzies noted. “It is anticipated that we will make further announcements in the second half of the year as a number of these ventures complete.”
Shore Capital analyst Robin Speakman said: “The aviation services specialist has provided an encouraging update on trading through its first half to end-June. The first-half performance is indicated to be back in profit against last year’s substantial [first-half] losses with momentum building.
“We hope and expect recovery in airline activity to begin to gain momentum through the [second-half] period on a like-for-like basis.
“We continue to assert that Menzies is poised to recover strongly from the pandemic as a leader in its aviation services specialisms.”
Earlier this year, Menzies set a goal of making 100 per cent of its operations carbon neutral by the company’s 200-year anniversary in 2033.
The firm – one of Scotland’s oldest – said it believed it was the first aviation services provider to make this “ground-breaking” commitment to carbon neutrality.
To achieve its green targets, the group will focus on investing in electric ground support equipment, reducing emissions through identifying operational efficiencies and balancing remaining emissions with carbon offsetting initiatives.
John Menzies started out in 1833 when its eponymous founder opened a bookshop at 61 Princes Street, Edinburgh which was to become the only wholesale bookseller north of the Border.
The newspaper and magazine distribution business was spun out in 2018, creating Menzies Distribution, and leaving the rest of the firm to focus on providing aviation services.
A message from the Editor:
Thank you for reading this article. We’re more reliant on your support than ever as the shift in consumer habits brought about by coronavirus impacts our advertisers. If you haven’t already, please consider supporting our trusted, fact-checked journalism by taking out a digital subscription: www.scotsman.com/subscriptions
Want to join the conversation? Please or to comment on this article.