John Menzies reports drop in profits
Edinburgh-based logistics group John Menzies has reported a fall in annual pre-tax profits, down from £25.7m in 2014 to £18.2m in 2015. In a statement issued today (8 March), Menzies said that the group earnings had been “impacted by Aviation operational issues at London Gatwick” which are “now resolved”. The Menzies statement explained that: “Increased labour costs, incurred in order to maintain contractual service levels, resulted in £6m of lost earnings”.
The firm is involved in both aviation and also the distribution of newspapers and parcels.
Presenting the annual results, Iain Napier, Chairman of John Menzies, said: “Our updated strategy for both divisions is now embedded and we are making good progress towards our stated objectives.
“However, 2015 was a challenging year for the Group with operational issues at London Gatwick suppressing profits.
“Outside of the UK, the Aviation business continued to make progress, particularly in cargo handling and North American ground handling.
Menzies Distribution performed strongly, whereby print media decline was fully mitigated and our expansion into the e-commerce fulfilment market gained real traction with the acquisitions of AJG Parcels and Oban Express, and a number of new contract wins.
“The Board is confident that we have strategies available to us in both of our operating divisions capable of delivering growth. We continue to evaluate the optimum structure for the Group to potentially further enhance shareholder value.”
Menzies said that its Distribution business “outperformed management’s expectations in the year”, with underlying operating profit increasing to £25.1m (up from £24.0m in 2014).
The company reported that its expansion into the UK parcel market, primarily as a neutral consolidator, was continuing successfully.
Menzies explained: “During the year we acquired AJG Parcels Ltd for £7.5m. AJG handles around two million parcels per annum in the Scottish Highlands and Islands. Following this we acquired Oban Express, a complementary business to AJG, and since the year end have also acquired Thistle Couriers, an Aberdeen based parcel business that handles over 1,000 parcels per day. All three businesses now form Menzies Parcels which employs some 240 employees and handles over 2.8 million parcels per annum. Menzies Parcels is establishing a niche in the growing UK e-commerce fulfilment market and we will look to build our position going forward.”
The firm’s trucking business also expanded in 2015, with new contracts from wnDirect, Card Factory, WHSmith, B2C Europe and others.
“These contract gains represent further steps to utilise our existing property and vehicle assets during daylight hours using our proven track record for a fast and effective logistics solution,” added Menzies.
