Menzies flies back into profitability as talks with Kuwaiti suitor continue

John Menzies and its Kuwaiti suitor National Aviation Services (NAS) have been granted more time to conclude talks regarding the latter’s bid for the Edinburgh-based aviation services company, which has also revealed its turnaround back into profitability.

The London-listed firm – one of Scotland’s oldest companies – said revenue for 2021 came in at $1.4 billion (£1.1bn), up from $1.1bn in 2020, for the first time reporting in dollars rather than pounds as was the case previously.

The sales growth, it explained, was buoyed by commercial deal-signing gaining pace, with net wins contributing $112 million in incremental annual revenue, highlighted by the Avianca cargo win at Miami, outsourcing ground services with Qantas across Australia, and renewals with EasyJet at 23 airports in Europe.

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Operating profit for the year was $59m, swinging from an operating loss of $124m in 2020, and pre-tax profit amounted to $30m, from a pre-tax loss of $155m. The “substantial” profit turnaround was attributed to air cargo resilience, returning flight volumes, continued management actions to control costs and reshape the business, and governmental support schemes.

'We now operate at 212 airports in 38 countries, and have a compelling pipeline of opportunities,' says the Edinburgh-based firm. Picture: contributed.
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The business singled out its equity raise of $30m in May 2021 to fund business-development and its deal pipeline, and reduce leverage, while it also pointed to its entry into new emerging aviation markets, with expansion into China, Costa Rica, El Salvador and Guatemala. Menzies has also recently highlighted contract wins in, say, Mexico and Colombia.

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The firm has now again addressed the offer made by NAS, having said on February 21 that it was in talks with the latter regarding its final proposal at 608 pence per share.

The Scottish firm, which provides fuelling, ground handling, lounge and maintenance services at more than 212 airports in 38 countries, had previously rebuffed a 510p-a-share unsolicited bid proposal from NAS, which is part of the wider Agility Public Warehousing Co.

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Talks are ongoing, Menzies has now said, and the relevant deadline has been extended from tomorrow to March 30.

Menzies chairman and chief executive Philipp Joeinig praised the “strong set of results for 2021, despite the continuing impact of Covid on aviation activity levels”.

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The group is now purely focused on aviation, but started out as a bookshop in 1833, and notes that this was 86 years before the world’s first non-stop transatlantic flight. It moved into newspaper distribution, but sold off its distribution arm in 2018.

Strength

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Mr Joeinig continued by saying: “The rebalancing of our business as a major aviation logistics player continues at pace. We have seen significant growth in our air cargo business by winning contracts and widening the global reach of our network, while our fuel and ground services businesses go from strength to strength.

“The reshaped business is emerging strongly from Covid and our opportunity for growth is significant. Our future growth will be driven by continued recovery in volumes, growth in the global aviation market, further commercial gains and the successful conversion of our exciting business development pipeline. As a result of significant management action to reduce costs, we expect that this growth will be achieved while delivering structurally higher margins.”

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