Menzies share price takes off on profit surge

Shares in aviation services and distribution firm John Menzies raced ahead by more than 9 per cent yesterday after the firm announced a 28 per cent boost in underlying profit and came close to breaking the £2 billion turnover mark.

The Edinburgh-based company, which paid only an 8p interim dividend last year, is also recommending a final dividend of 14p giving a full year payout for 2010 of 19p.

Finance director Paul Dollman said: "As long as the profits keep coming in we will continue to grow our dividend."

Positive results were driven by the aviation business, which enjoyed a boost on pre-recession volumes in cargo handling after a torrid 2009.

Menzies said it had also won a number of contracts in airports around the world, particularly in the higher-margin ground handling business which now accounts for 60 per cent of the division's income.

"If everything we had was just in the UK you'd be taking a fairly gloomy outlook. But because we have this fantastic global spread, we have lots of exposure to emerging markets and the riskiness of the business is much lower before."

Underlying profits in aviation rose 56 per cent to 24.6m while turnover rose to 626m.

Dollman said the aviation division was expected to grow a further 10 to 15 per cent in 2011.

Profits for the larger distribution business also rose 3 per cent to 28.8m on a turnover of 1.3bn despite "difficult markets" as severe winter weather conditions hit, particularly in Scotland. The firm hailed its reduction in debt levels to 99m, 33m lower than last year.

Dollman said: "The priority in debt reduction is completely gone now. Our debt levels are now on sweet-spot levels. We have a lot more choices now in what we do next."

Shares closed up 7.7 per cent or 32.75p at 460p.