John Geddes, corporate affairs director of John Menzies (MNZS), described the group's recent acquisition of aircraft services group ASIG for $202m (£166m) as a "game changer". The group's distribution division has suffered in recent years with the decline in print media, so the pivot is understandable.
The aviation services division grew underlying operating profit 27 per cent at constant currencies to £34.2m, overtaking the distribution division's £24.7m. This shift is expected to continue, and the former to account for around three-quarters of profits in 2017. Integrating ASIG is expected to generate £6.5m in cost savings in the first year, increasing thereafter as back-office functions are merged.
Increased pressure from both the decline in newspaper and magazine volumes and the introduction of a higher minimum wage both contributed to a squeeze on profits in the distribution division, which achieved underlying operating profit of £24.7m, down from £25.1m in 2015. The group's strategy is to try to increase volumes via retail logistic deals while reducing costs. The division saved £5.1m through the year via productivity initiatives and automation in some of its branches.
Analysts at Numis forecast profit before tax of £64m in 2017, giving diluted EPS of 55.2p (up from £49.7m and 47.7p in 2016).
JOHN MENZIES (MNZS) | ||||
|---|---|---|---|---|
| ORD PRICE: | 581p | MARKET VALUE: | £484m | |
| TOUCH: | 578.5p-581p | 12-MONTH HIGH: | 619p | LOW: 385p |
| DIVIDEND YIELD: | 3.2% | PE RATIO: | 42 | |
| NET ASSET VALUE: | 153p* | NET DEBT: | 55% | |
| Year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012** | 1.90 | 28.1 | 28.1 | 22.6 |
| 2013** | 1.91 | 42.1 | 45.0 | 23.8 |
| 2014** | 1.90 | 25.7 | 20.4 | 14.6 |
| 2015** | 1.90 | 18.2 | 14.6 | 15.1 |
| 2016 | 1.98 | 19.8 | 11.8 | 18.5 |
| % change | +4 | +9 | -19 | +23 |
Ex-div: 25 May Payment: 3 Jul *Includes intangible assets of £104m, or 125p a share **EPS and DPS restated to reflect 5-for-14 rights issue in Oct 2016 | ||||
