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Menzies' profit growth grounded

John Menzies full-year figures were hit by operational difficulties at its aviation business and falling print sales at its distribution wing.
March 10, 2015

Management at John Menzies (MNZS) had already warned that full-year performance would suffer as a result of upheaval at Heathrow. Turnover for the group's aviation division did grow 9 per cent last year, but profits were held back after British Airways accelerated its move to Terminal 5. Although ground handling activity increased, start-up costs were £1.9m higher than the previous year. This drove group operating profit down 44 per cent to £25.5m.

IC TIP: Hold at 388p

By comparison, the group's distribution business, which services the magazine and newspaper industries, recorded a relatively modest fall in adjusted operating profits to £24m (from £24.3m in 2013) on the back of a successful cost-cutting drive. Falling newspaper and magazine sales prompted the group to reduce the number of its distribution hubs by 20 per cent. This brought £3.4m of cost savings. With more closures on the way, management expects a further £2.5m in savings by the end of the year. In order to diversify its distribution business, Menzies plans to expand its footprint in the ecommerce market.

Broker Numis expects adjusted EPS of 45.4p, down from 49.2p in 2014.

JOHN MENZIES (MNZS)

ORD PRICE:388pMARKET VALUE:£238m
TOUCH:388-390p12-MONTH HIGH:715pLOW: 309p
DIVIDEND YIELD:4.2%PE RATIO:17
NET ASSET VALUE:111p*NET DEBT:159%

Year to 31 DecTurnover (£bn)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20101.837.547.819.0
20111.952.571.824.0
20121.928.131.325.2
20131.942.150.126.5
20141.925.722.716.2
% change--39-55-39

Ex-div: 28 May

Payment: 3 Jul

*Includes intangible assets of £116m, or 189p a share