Group set for restructure
Smurfit to consider break-up of Menzies
Dermot Smurfit (pictured), who took on the role at the end of last month, said he would be responding to shareholder pressure following a period of under performance.
This was a “complex” task but advisers are already working on ways to resolve pensions and other issues, he said.
“The Group continues to make positive progress and the board expects the full year outturn to be in line with our expectations even before allowing for the positive impact of foreign exchange rates,” he said.
“Nevertheless, as shareholders will be aware the group has underperformed in the past and the board is determined to address historic performance shortfalls including a review of the group structure.”
Referring to John Menzies as “an exceptionally strong brand”, he said: “I believe there is a great amount of potential to be unlocked within the group and I will work hard with the Board and management team to assist the group in achieving significant growth in the coming years.
“We have delivered a good set of results with continued progress being made at aviation, winning and renewing contracts and delivering against our strategy. At distribution, we continue to trade well in the face of continuing volume declines and the impact of the National Living Wage.”
Shareholders, however have been agitating for the group to unlock value, possibly through a break-up.
Dr Smurfit, who replaced Iain Napier after the annual meeting, said: “One of my tasks will be to review the structure of the group in order that we can maximise shareholder value.
“This will include looking at whether our two operating businesses are best placed to prosper while they are part of one group.
“The situation is complex, particularly with regard to our pension schemes. Management have already engaged with specialist advisers and our pension trustees, and work is under way to structure the pension scheme in such a way as to give the board the maximum amount of flexibility in future.
“I expect this work to take up to 12 months and we will update shareholders when appropriate.”
The company reported a fall in half-year pre-tax profits from £5.8m to £3m on constant turnover of just over £1 billion. Underlying profit before tax rose from £17m to £18.1m.
It proposes an interim dividend of 5.4p against 5p last time (up 8%),
“I am pleased that the underlying financial performance in the first half was ahead of 2015, reflecting the positive impact of Aviation ground handling gains, the start-up of our acquisition in Bermuda and the return of stable operations at London Gatwick.
“Menzies Distribution performed to expectations, with print media declines largely mitigated by strong sticker sales associated with the European football championships and our expanding e-commerce business.”
During the period Paul Baines, Giles Wilson and Forsyth Black joined the board, while Iain Napier, Jeremy Stafford and Paula Bell stepped down.