TIDMMNZS
RNS Number : 3163L
Menzies(John) PLC
12 January 2021
12 January 2021
John Menzies plc
(the "Company" or the "Group")
Trading Update
John Menzies plc, the global aviation services business, today
announces a trading update for the year ended 31 December 2020.
Whilst market conditions have remained volatile and challenging
during the second half, the Board is pleased to report that the
Group has continued to trade in line with the expectations set out
in the Group's interim results on 29 September 2020. Revenues for
the second half were similar to those reported in the first half
and for the full year were 37% below the prior year.
In the second half, activity levels showed an encouraging
recovery through the third quarter, after the very severe reduction
in the second quarter. Towards the end of the period activity
levels declined as a result of normal seasonal factors, as well as
the impact of further Covid-19 travel restrictions. Ground and
fuelling service volumes ended the year 50% below the prior year.
Revenues from air cargo services were more resilient with volumes
c20% below 2019 levels and strengthened by higher yields.
As anticipated, in the second half, the Group generated an
underlying operating profit which was in line with the Board's
expectations. As previously guided, this second half performance
was driven by increased volume, a significant contribution from
various government support programmes, the positive impact of
continued effective cost management and a proactive flexible
approach to operations.
Despite the extremely challenging conditions in 2020, the Group
has successfully managed its financial position, and as a result,
our liquidity is strong coming into 2021. Although as previously
disclosed, as market conditions and activity levels have improved
there has been some working capital outflows in the second half
that is expected to continue into 2021. Following a very strong
cash inflow during the first half and a disciplined approach to
cash management during the second half, the Board is pleased to
report that both net debt and liquidity ended the year favourable
to expectations and well above the minimum liquidity covenant.
During 2020, we successfully renewed several key contracts and
recorded a number of important contract wins in both air cargo and
ground services, including the deepening of our relationships with
Qatar Airways, Wizzair, Loganair and Jetstar. We have also been
working with customers to improve our reimbursement for excess
costs incurred during the crisis.
The Group has made good progress with its growth strategy of
diversifying our product portfolio and entering emerging markets
with the acquisition of a 51% stake in Royal Air Services ("RAS") a
ground and air cargo services provider at eight airports across
Pakistan. This acquisition creates a strong platform for Menzies in
this attractive growth market and represents clear delivery against
the Company's strategic objectives of increasing depth of service
capability and expanding its geographical footprint. We have also
secured a new licence that will see our entry into Cyprus and
confirmation that our new joint venture in Iraq will commence
operations in January.
Outlook
We continue to believe market conditions will remain challenging
through the early part of 2021, and this is reflected in the
Group's operational and financial assumptions.
While there has recently been some renewed Covid-19 related
disruption, the positive developments with regard to the roll out
of vaccination programmes are encouraging and support assumptions
of a gradual recovery in volumes from the second quarter of
2021.
Assuming a more stable, if still subdued, backdrop in 2021, the
actions taken to structurally reduce costs, should show an
increasing benefit in the current year, with government support
schemes also continuing to provide a material benefit in the first
quarter.
Over the medium to long term, the Board expects that the
benefits of the reduced cost base, together with the ongoing good
commercial momentum will contribute to structurally improved
operating margins and consistent cash generation. This will enable
the Group to both reduce its leverage and take advantage of
selective strategic opportunities that may arise.
Overall, the Board remains confident in the medium and long-term
growth potential of the aviation services market and believes that,
as the global aviation market recovers, John Menzies plc, as a
well- invested global leader, is well positioned to take advantage
of the pipeline of organic and inorganic opportunities that
exist.
Philipp Joeinig, Chairman & CEO, said:
"I see the opportunities for the business as being stronger than
ever. I am pleased that we have not wasted this crisis, having
instead used it to become more competitive. We are well on track
with our rebased growth strategy and we are moving in the right
direction towards being the service provider of choice to our
customers."
For further information
John Menzies plc
John Geddes, Corporate Affairs Director & Group Company Secretary 0131 459 8044
FTI Consulting
Jonathon Brill/Fern Duncan 020 3727 1068
Notes
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulation ("MAR") EU no.596/2014 and is disclosed
in accordance with the Company's obligations under Article 17 of
MAR. Upon the publication of this announcement via Regulatory
Information Service, this inside information is now considered to
be in the public domain. For the purposes of MAR and Article 2 of
Commission Implementing Regulation (EU) 2016/1055, the person
responsible for arranging for the release of this Announcement on
behalf of the Company is John Geddes, Corporate Affairs Director
& Group Company Secretary.
Forward Looking Statements
This announcement may include statements that are, or may be
deemed to be, "forward-looking statements". These forward-looking
statements may be identified by the use of forward-looking
terminology, including the terms "believes", "estimates", "plans",
"projects", "anticipates", "expects", "intends", "may", "will" or
"should" or, in each case, their negative or other variations or
comparable terminology, or by discussions of strategy, plans,
objectives, goals, future events or intentions. These
forward-looking statements include all matters that are not
historical facts and involve predictions. By their nature,
forward-looking statements involve risk and uncertainty because
they relate to events, and depend on circumstances, that will occur
in the future. Forward-looking statements may and often do differ
materially from actual results expressed or implied in these
forward-looking statements. Any forward-looking statements reflect
the Company's current view with respect to future events and are
subject to risks relating to future events and other risks,
uncertainties and assumptions relating to the business, results of
operations, financial position, liquidity, prospects, growth or
strategies of the Company, and the industry in which John Menzies
operates. Forward looking statements speak only as of the date they
are made and cannot be relied upon as a guide to future
performance. Save as required by law or regulation, John Menzies
disclaims any obligation or undertaking to release publicly any
updates or revisions to any forward-looking statements in this
announcement that may occur due to any change in its expectations
or to reflect events or circumstances after the date of this
announcement.
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END
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