Industrial Transportation (2770)

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Menzies swings back to profit amid first-half strategic progress

By Josh White

Date: Wednesday 01 Sep 2021

LONDON (ShareCast) - (Sharecast News) - Aviation services provider John Menzies reported underlying operating profit of £22m in its first half on Wednesday, swinging from the £39m loss it recorded a year earlier.
The London-listed firm said the turnaround in operating profitability excluding government support was £30m stronger on similar revenue, reflecting the impact of management actions to control costs and reshape the business.

Revenue was "broadly flat" compared to the prior year for the six months ended 30 June, at £415.8m, compared to £431.5m.

The board put that down to the "gradual recovery" in ground and fuel services volumes, following a "rapid fall" at the start of the Covid-19 pandemic in the second quarter of 2020.

Underlying operating cash flow was ahead of expectations, resulting in net borrowings of £349m, with available cash plus undrawn banking facilities totalling £179m at period end.

Net debt was £183m as at 30 June, reflecting "strong" cash flow in the period.

Operationally, Menzies said the turnaround in the business was driven by restructuring, cost actions and new business wins, together with continued support from government schemes.

It reported a "strong performance" in air cargo services and cargo forwarding, and successfully raised £22m in the period to fund business development and its mergers and acquisitions pipeline.

Looking at its strategic priorities, Menzies made a "record" air cargo contract win with Avianca at Miami during the period, as well as gains in its outsourcing operations with Qantas across Australia.

It also renewed easyJet contracts at five UK airports, and made positive development momentum with acquisitions in Pakistan and Guam and new operations in Iraq, as well as announced investments in China and central America.

The company improved the balance of its services portfolio through air cargo growth, with more than 50 stations now in its global network.

"I am pleased that we have delivered a strong first half despite the continuing impact of Covid-19 on travel," said chairman and chief executive officer Philipp Joeinig.

"This outturn is testament to the actions that were taken last year and our continuing tight focus on all aspects of our operations."

Joeinig said the company was "committed" to delivering against its strategic priorities, and was making "good" progress.

"We continue to win contracts, enter new markets and optimise the mix of our business portfolio.

"Furthermore, we are confident that our resilient business model leaves us well placed to prosper as flight volumes continue to recover."

At 0823 BST, shares in John Menzies were up 0.63% at 326.03p.

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