Menzies hit by airline closures

Menzies' aviation business, which is the second-largest ground and cargo handling operator in the world, reported sales up 2.3 per cent to £340m as 22 new contracts offset the loss of revenue (around £7.7m) from five airline customers ceasing to trade. This translated into a 5 per cent rise in operating profits to £14.5m although, adjust for the impact of euro weakness, and underlying growth would have been nearer 12 per cent. Earlier this month Menzies boosted its ground-handling operations with the £4.75m acquisition of UK-based Flight Support. However, the decision to exit cargo handling in four UK locations resulted in a £3m hit to profits, which explains the decline in the reported figures in our table below.

The group's magazine and newspaper distribution division produced another resilient performance, boosting underlying operating profits by £0.3m to £14m, despite a near 4 per cent fall in sales, driven by a combination of cover prices increases and cost savings.

Broker N+1 Brewin forecasts 2012 adjusted pre-tax profits of £57.4m and EPS of 70.9p (from £56.4m and 71.2p in 2011), rising to £58.6m and 72.4p, respectively, in 2013.