Edinburgh-based aviation logistics and news distribution company John Menzies said its 2016 turnover rose to just more than £2 billion from £1.99 billion in 2015 and profit before tax edged up to £19.8 million from £18.2 million as its chairman declared the firm was “back on track after a period of underperformance.”
Favourable exchange rates enhanced Menzies’ earnings, and its dividend will be increased 10% to 18.5p.
Menzies has had a tumultuous two years, with major changes in its executive ranks, and has been under pressure from activist shareholders to split into two separate companies in aviation and distribution.
Menzies last month completed the acquisition of Orlando, Florida-based aviation and fuel services company ASIG from BBA Aviation for $202 million.
John Menzies chairman Dermot Smurfit said the company was still working on a review of its structure “to decide whether the current situation with two operating divisions that operate in distinctly different markets” was the best way to create shareholder value.
“To help with the process we appointed Rothschild and they are working closely with management as we review our options …” said Smurfit.
“I remain confident that I will be able to update shareholders on the outcome of this review at the time of our interim results in August.”
Smurfit added: “I am pleased to report a strong performance by the group in 2016.
“At Menzies Aviation, underlying profits were significantly ahead of last year at constant currency and have been strengthened through favourable foreign exchange translation.
“At Menzies Distribution, keeping profits broadly flat was a commendable performance in light of increasing cost pressures.
“We successfully completed the acquisition of ASIG on 1 February 2017 and this brings with it exciting new product lines that provide us with great opportunities to strengthen our business and to expand our product offering across our network.
“As we look forward, our group structure review continues and I look forward to updating shareholders at the latest in our interim results announcement.”
In his outlook, Smurfit said Menzies had started the year well, with the underlying aviation business continuing to trade positively “with contract momentum continuing and a strong pipeline of opportunities.”
However he added: “At Menzies Distribution, the softer magazine volumes experienced in Q4 2016 have continued.
“Our focus remains on cost savings and finding new volume through retail logistics where our national coverage provides us with previously unexploited opportunities and neutral consolidation in the parcel market where we will look to build scale during the year.
“Overall the board is confident with the group’s outlook for 2017 and will look to capitalise on opportunities in both divisions.”