Cargo revival boosts Menzies profits

JOHN Menzies overcame disruption caused by the Icelandic volcano to reveal a doubling in profits at its aviation services division today.

The Edinburgh-based group, which also runs a newspaper and magazine distribution business, benefited from a significant turnaround in cargo volumes and a sizeable number of contract wins in ground handling.

With group-wide profits for the six months to June 30 up by 46 per cent on an underlying basis at 19.3m, Menzies said it was on course to exceed current market expectations for the full year. Shares in Menzies - one of Scotland's largest companies - rose three per cent following today's update.

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Profits in the aviation division jumped to 9.1m from 4m as increased demand for de-icing services following the cold start to the year in northern Europe also boosted revenues.

The division won 56 contracts and lost 16 in the first half, with the majority of those lost relating to route cutbacks and airline failure.

It suffered a 2.5m hit from the volcanic activity in Iceland, which resulted in large parts of European air space being closed during April.

"It is testament to the flexibility and spirit of our employees that the size of the loss was not bigger, as the majority of staff either took holidays or accepted flexible working conditions during what was an unprecedented period for the industry," the company said.

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The division employs 16,000 people and serves more than 500 airline customers at 112 locations in 27 countries, including South Africa where the company handled some 250 extra charter flights during the World Cup.

The tournament also had a positive impact on Menzies Distribution, which produced a solid performance with profits up seven per cent to 14.5m.

The business, which handles around 5.5m newspapers and 2.2m magazines every day, benefited from new business gained from rival Dawson Holdings and strong demand for World Cup stickers.

The division employs 4,000 people at 48 sites in the UK.