After growing operating profits 31 per cent in 2011 to £32.3m, John Menzies' aviation business has now become the biggest contributor to group profits. That's a significant milestone in its attempts to shift focus away from the managed decline of its newspaper and magazine distribution business - where profits flatlined at £28.8m during the year, following £4.6m of cost cuts. The hefty dividend hike is impressive, too.
While Menzies is the world's number two luggage-and-cargo handling business, it still only controls 2 per cent of the outsourced market, which itself represents just a quarter of all handling. So there's plenty of scope to achieve growth targets of between 10 and 15 per cent a year, and a number of contracts have been won since the year-end. Meanwhile, a new SAP computer system means Menzies should be able to continue pushing through cost savings of around £3m to £3.5m a year at the distribution business to offset the ongoing decline in the newspaper and magazine market. Management is also confident about prospects for the division's two small growth businesses -Menzies Select and Menzies Marketing Services.
Broker Peel Hunt has nudged down its 2012 forecasts, reflecting a pension charge rise, to pre-tax profit of £58m and EPS of 75.1p (£56.4m and 73.2p in 2011).
| John Menzies (MNZS) | ||||
|---|---|---|---|---|
| ORD PRICE: | 586p | MARKET VALUE: | £349m | |
| TOUCH: | 586-594p | 12-MONTH HIGH: | 614p | LOW: 425p |
| DIVIDEND YIELD: | 4.1% | PE RATIO: | 9 | |
| NET ASSET VALUE: | 140p* | NET DEBT: | 95% | |
| Year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2007 | 1.54 | 31.8 | 44.2 | 25.6 |
| 2008 | 1.67 | 9.90 | -2.00 | 7.60 |
| 2009 | 1.73 | 22.0 | 25.8 | 8.00 |
| 2010 | 1.84 | 37.5 | 47.8 | 19.0 |
| 2011 | 1.90 | 48.5 | 64.9 | 24.0 |
| % change | +3 | +29 | +36 | +26 |
Ex-div: 23 May Payment: 22 Jun *Includes intangible assets of £105m, or 176p a share | ||||
