John Menzies looks to reach new heights in long term after posting full-year loss
John Menzies has stressed its optimism about delivering sustainable growth after swinging to a £120.5 million pre-tax loss in 2020, dragged by the headwinds of travel restrictions imposed due to the pandemic.
The loss by the Edinburgh-headquartered global aviation services group – which is one of Scotland’s oldest companies – contrasts with a £17.3m pre-tax profit in 2019.
It said it came amid a 49 per cent year-on-year reduction in flight volumes in ground handling and fuel services.
Revenues came in at £824.2m, down from £1.3 billion – but it said the impact was partly offset by “significant” cost management and global government support schemes, limiting the underlying operating loss to £18.5m before exceptional costs. Some £30m of fixed costs were removed, of which two-thirds is permanent.
Exceptional costs came to £70.2m, which the listed firm said primarily reflected the costs of reshaping its cost base, one-off costs associated with refinancing, asset write-downs and the resolution of historical claims.
However the business also flagged milestones such as starting operations in Baghdad, Iraq, and its acquisition of Royal Airport Services, which completed in January of this year, delivering ground and air cargo services at eight locations across Pakistan.
Last year it signed a five-year contract signed with Wizz Air at its main hub in Budapest, and it has also inked significant air cargo contracts with Qatar Airways at seven locations on three continents.
Chairman and chief executive Philipp Joeinig said: "The Covid-19 pandemic has brought about unprecedented challenges to our business as the effects on travel continued to have a significant impact on our global operations.
"Despite the difficulties it presented we acted decisively, adjusting the size of our operations, and ensuring sufficient liquidity was maintained. We remain a strong business and well-placed to benefit as the market recovers and the industry returns to structural growth.
"Looking forward we will continue to deliver against our strategic priorities. We are winning new contracts, entering new markets and optimising our portfolio. As flight volumes recover, I am confident that we will emerge as a more agile, resilient and profitable business with a sharply focused footprint and portfolio."
Analyst Robin Speakman of Shore Capital hailed a “resilient” set of results in the face of extremely challenging conditions. “Whilst broadly in-line with our expectations, cost management skill is evident in positioning the business to capture the recovery as this emerges through the remainder of  and .
“Menzies is emerging from the crisis as a smaller business, with strong support from its banks and customer base, with some welcome government assistance, but without recourse to shareholders. We now look forward. Menzies has enacted a strategy of engagement as aviation markets open, specifically prioritising activities and regions and staging the reintroduction of costs.
“That the group has emerged from the pandemic smaller, but focused and able to capture opportunities in recovery, is testament to strategic delivery and effective cost management.”
John Menzies started out in 1833 when its eponymous founder opened a bookshop at 61 Princes Street, Edinburgh, which was to become the only wholesale bookseller north of the Border. He also sold The Scotsman over the counter.