Menzies shares fall on coronavirus trading update

Shares of Edinburgh-based aviation services company John Menzies plc fell about 4% on Thursday after it issued a trading update on the impact of coronavirus COVID-19 on its business.

Menzies said the outbreak and continued spread of COVID-19 is having a “direct impact on the operations of the group” with the impact at its greatest in Macau “and where we handle Chinese carriers across our network.”

Menzies said it estimates there is “likely to be an adverse profit impact in the year of approximately £6-9m on the assumption that the impact of the virus subsides towards the end of quarter two.”

Menzies also announced a successful refinancing with its banking syndicate.

“As a result, the group has extended its current levels of facilities at £325m through to 2025 with improved covenants providing a strengthened funding platform from which to deliver attractive levels of growth over the medium term.”

On the virus situation, Menzies said: “Notwithstanding the progress made in 2020 so far, the outbreak and continued spread of COVID-19 (coronavirus) is having a direct impact on the operations of the group.

“This impact has been at its greatest within our operations in Macau and where we handle Chinese carriers across our network.

“The situation is still evolving, and we only have limited visibility of what flight schedules are being impacted into March and beyond, so it is difficult to assess how extensive the impact could be at this point.

“However, the board currently estimate that there is likely to be an adverse profit impact in the year of approximately £6-9m on the assumption that the impact of the virus subsides towards the end of quarter two. 

“Wherever possible mitigation actions are in place along with a tight control on costs and expenditure.

“Given the otherwise underlying positive momentum of the business, this headwind is disappointing, but the group is well positioned to manage it effectively and return to our positive growth trajectory for this year and beyond.”

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