John Menzies has posted a slump in pre-tax profits off the back of acquisition costs and work to offload its distribution business, though turnover rose by a fifth in the six months to 30 June.
The logistics and airport services firm reported a drop in pre-tax profit from £3m to £500,000, while revenue was up 21 per cent on the same time last year, at £1.2bn.
Menzies acquired ASIG on 1 February, and said it dealt with transaction related costs, while it also had charges from its old defined benefit pension scheme, saying exceptional items in operating profit were £17.6m, up from £10m for the first-half of 2016.
It had good news for investors with the announcement that its interim dividend had been hiked 11 per cent to 6p.
As for its divisions, underlying operating profit more than doubled to £21.7m at Menzies Aviation, while profits were broadly flat at Menzies Distribution.
Why it's interesting
Yesterday, the firm announced it had ditched discussions to offload its distribution business to DX Group, after undertaking "further financial due diligence" off the back of DX's latest trading update.
And costs to the proposed tie-up have buffeted the company somewhat, but Menzies said yesterday it did not think it was possible to reach a deal that would have been in the interests of its shareholders. The firm does though, still think there is "strategic merit" in separating its aviation and distribution units into independent businesses.
What the company said
Dr Dermot F. Smurfit, chairman of John Menzies said:
Menzies Aviation continues to go from strength to strength. The recently acquired ASIG business is integrating well and generating many opportunities for growth. Within the rest of the business contract win momentum continued and we are benefiting from our investments into infrastructure and innovation.
Menzies Distribution remains a strong business, performing well despite cost and volume pressures.
Overall, I am very pleased with the Group's performance in the first half and we look to the future with confidence as demonstrated by the increased dividend payment.