It's a little over a year since John Menzies’ (MNZS) pivot towards aviation services, and the strategic shift already looks to have been vindicated, with 150 (net) contract wins through 2017. The aviation division, which includes check-in and cargo services, drove significant profit growth in the group at large, with adjusted pre-tax profit up 27 per cent at constant currencies, while free cash flow also strengthened, with the year-end balance of £49.2m representing a 58 per cent increase.
A key part of the shift was the February acquisition of ASIG, which was acquired to add plane refueling to the business mix and open new markets. Integration has progressed smoothly and management is now guiding for cost synergies of £15m, from an initial estimate of £10.5m. The $202m deal caused net debt to spike, but it came down to 1.9 times adjusted cash profits by the year-end, inside the two times multiple targeted by the end of 2018.
The group is still looking to offload its distribution division, which has been struggling with the decline in print media in recent years. Earlier plans to spin out the division to combine with DX (DX) were scuppered, but John Menzies has appointed advisers and has begun a sale process.
Foreign exchange headwinds caused analysts at Peel Hunt to cut adjusted pre-tax profit expectations by 3 per cent. They are now forecasting £69.6m in 2018, giving EPS of 61.9p (from £67.1m and 57.2p in 2017).
| JOHN MENZIES (MNZS) | ||||
| ORD PRICE: | 692p | MARKET VALUE: | £579m | |
| TOUCH: | 689-692p | 12-MONTH HIGH: | 750p | LOW: 585p |
| DIVIDEND YIELD: | 3% | PE RATIO: | 46 | |
| NET ASSET VALUE: | 163p* | NET DEBT: | 162% | |
| Year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 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 |
| 2017 | 2.46 | 26.7 | 15.1 | 20.5 |
| % change | +24 | +35 | +28 | +11 |
| Ex-div: | 24 May | |||
| Payment: | 2 Jul | |||
*Includes intangible assets of £204m, or 243p a share **Restated to reflect new accounting regulation | ||||
