Setback to progress
Menzies facing £9m hit to profit from coronavirus
Profits will be lower at Menzies
Aviation services company John Menzies said the coronavirus outbreak is having a direct impact on group operations and on profits, delivering a setback to recent progress.
The Edinburgh-based company said this impact has been greatest in its operations in Macau and where it handles Chinese carriers across its network.
“The situation is still evolving, and we only have limited visibility of what flight schedules are being impacted into March and beyond, so it is difficult to assess how extensive the impact could be at this point,” it said in a trading update.
“However, the board currently estimate(s) that there is likely to be an adverse profit impact in the year of approximately £6m to 9m on the assumption that the impact of the virus subsides towards the end of quarter two.
“Wherever possible mitigation actions are in place along with a tight control on costs and expenditure.
“Given the otherwise underlying positive momentum of the business, this headwind is disappointing, but the group is well positioned to manage it effectively and return to our positive growth trajectory for this year and beyond.”
As set out in the trading update of 28 November, the group said it had made significant progress during FY19 in establishing a platform for long term, sustainable growth. The actions taken to right-size the business and reduce overheads during 2019 are delivering benefits.
The focus on operational discipline is also bearing fruit with underperforming stations responding to actions and it is progressing business development activities where there are “many opportunities”.
In addition, the positive commercial momentum of the Group, which improved significantly during 2019, has continued in the new year.
“We are also pleased to announce that a successful re-financing of the Group was agreed with our banking syndicate in January. As a result, the Group has extended its current levels of facilities at £325m through to 2025 with improved covenants providing a strengthened funding platform from which to deliver attractive levels of growth over the medium term.”
The group will be announcing its full-year results for the year ended 31 December 2019 on 10 March.