Menzies secures £180m distribution contracts

JOHN Menzies has expressed confidence over the outlook for its magazine distribution arm after securing contracts worth a total of £180 million a year.

The baggage handler and newspaper wholesaler yesterday said it had successfully renegotiated terms with existing clients Frontline and Seymour, two of the UK’s largest magazine distributors, just weeks after renewing a £150m contract with Daily Record owner Trinity Mirror.

Frontline and Seymour are owned by a group of publishers comprising Bauer, Haymarket and Immediate Media Company. Between them, the two firms control 42 per cent of the magazine market, and the deal with Menzies runs until 2020.

David McIntosh, managing director of Menzies Distribution, said: “These renewals are a further step in underpinning our core business. We now have contracts with the majority of the major publishing groups secured through to 2019 and this allows us to build for the future with confidence.”

In November, Menzies warned its full-year profits would fall short of its expectations following disappointing sales of magazines and sticker albums.

Although the outlook for its aviation cargo and baggage handling business was described as “positive”, boosted by a five-year deal with Hong Kong-based airline Cathay Pacific, its distribution operation faced a “poor” trading environment, having suffered an 11.4 per cent drop in magazine revenues for the first six months of the year.

Analysts at house broker Numis Securities have pencilled in an annual pre-tax profit of £53m, on sales of £2 billion.