John Menzies (MNZS) battled a cocktail of challenges last year – weak cargo volumes, flight schedule reductions on the back of Boeing’s 737 Max woes and the collapse of airlines such as Thomas Cook. The aviation services specialist saw underlying operating profit dip 6 per cent at constant currencies to £51.9m in 2019.
Despite the unforgiving backdrop, the group pushed on with its ‘fit for 2020’ plan, completing a cost-cutting programme that will deliver over £10m of savings. It renewed over £150m of annualised revenue, securing contract extensions at improved margins.
Free cash flow jumped over 50 per cent to £81m. But net debt (excluding £176m in lease liabilities) ticked up 9 per cent to £217m, equivalent to 2.9 times cash profits (Ebitda). Looking to reduce leverage to 2-2.5 times cash profits by the end of 2020, the dividend has been “temporarily” suspended with no final payout declared for 2019.
This comes amid the uncertain impact of coronavirus on the aviation industry – the International Air Transport Association (IATA) estimates global revenue losses for passenger airlines this year could range from $63bn-$113bn. The epidemic is impacting Menzies’ operations, particularly in Macau and where it handles Chinese airlines. It is currently guiding to a £6m-£9m hit to profit in 2020.
Peel Hunt forecasts adjusted pre-tax profit of £38.4m and EPS of 31.8p in 2020, rising to £52.7m and 43.5p in 2021.
| JOHN MENZIES (MNZS) | |||||
| ORD PRICE: | 210p | MARKET VALUE: | £170m | ||
| TOUCH: | 208.5-210p | 12-MONTH HIGH: | 550p | LOW: | 210p |
| DIVIDEND YIELD: | 2.9% | PE RATIO: | 19 | ||
| NET ASSET VALUE: | 104p* | NET DEBT: | £392m** | ||
| Year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) | |
| 2015 | 1.90 | 18.2 | 14.6 | 15.1 | |
| 2016 | 1.98 | 19.8 | 11.8 | 18.5 | |
| 2017 | 1.27 | 9.90 | 0.10 | 20.5 | |
| 2018 | 1.29 | 21.6 | 14.6 | 20.5 | |
| 2019 | 1.33 | 17.3 | 10.8 | 6.0 | |
| % change | +3 | -20 | -26 | -71 | |
| Ex-div: | na† | ||||
| Payment: | na† | ||||
| *Includes intangible assets of £178m, or 212p a share | |||||
| **Includes lease liabilities of £176m | |||||
| †No final dividend in 2019 | |||||
