International trade, global travel and online shopping are good news for John Menzies (MNZS), but the Scottish logistics group has failed to take full advantage of the growth in these areas. Constant currency sales dipped in the first half of 2016, but aviation gains and strong sticker sales associated with the European football championships helped push underlying operating profits up 3 per cent to £21.1m.
The aviation segment has zeroed in on large customers, targeted growth markets and invested in complementary services to diversify its business. Constant currency sales climbed 5 per cent there as it benefited from higher ground handling volumes in continental Europe. It also struck a preliminary deal with Oman Air to provide ground handling services at nine Oman airports - its first meaningful foothold in the Middle East - and inked five-year contracts with British Airways and Iberia in Copenhagen and Virgin America in Los Angeles. But cargo volumes were down, partly due to a tough comparative against US seaport strikes.
Robust volumes of Euro 2016 stickers were tempered by further declines in newspaper and magazine shipments, meaning profits dipped in the larger distribution division. But it renewed its contract with publisher Northern & Shell, and its trucking business landed its first national distribution deal with WH Smith.
The weakened sterling prompted broker Numis to raise its forecasts. It now expects adjusted pre-tax profits of £44.5m this year, giving EPS of 47.2p (from £38.2m and 42.7p in FY2015).
| JOHN MENZIES (MNZS) | ||||
|---|---|---|---|---|
| ORD PRICE: | 602p | MARKET VALUE: | £370m | |
| TOUCH: | 601.5-602p | 12-MONTH HIGH: | 615p | LOW: 358p |
| DIVIDEND YIELD: | 2.9% | PE RATIO: | 64 | |
| NET ASSET VALUE: | 115p* | NET DEBT: | 176% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 954 | 5.8 | 4.7 | 5.0 |
| 2016 | 956 | 3.0 | -2.4 | 5.4 |
| % change | +0.2 | -48 | - | +8 |
Ex-div: 6 Oct Payment: 18 Nov *Includes intangible assets of £104m, or 170p a share | ||||
