Menzies suspends dividend in wake of coronavirus
Menzies: coronavirus headwind ‘disappointing’
Aviation group John Menzies has temporarily suspended its dividend on the back of the coronavirus outbreak.
The company said it had “right-sized the business” during the second half of 2019 and given the otherwise underlying positive momentum of the business, the headwind presented by COVID-19 is “very disappointing”.
In a statement with full year results showing a fall in pre-tax profit from £21.6m to £17.3m, the board said said that “given the previously stated impact of COVID-19 on the operations of the group and the ongoing uncertainty of the extent of the impact on the aviation industry, the board believes it prudent, and in the best interests of shareholders, to suspend the dividend temporarily.”
The board said it believes that this “decisive action” will support the company to maximise shareholder value in the short term by accelerating the pace of deleveraging the balance sheet, targeting a net debt to EBITDA leverage ratio of 2 to 2.5 times by the end 2020, whilst retaining the flexibility to grow the business.
It is therefore not recommending a final dividend payment for the year.
“We are pleased to have completed the successful re-financing of the group 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.
“Overall, we firmly believe the Group is well positioned to manage the short term issues that exist and will return to our positive growth trajectory for this year and beyond.”
Giles Wilson, CEO, said: “Last year, we said we would be ‘fit for 2020’ by doing five things: right-sizing the business, fixing underperforming operations, improving customer engagement, investing in our team and targeting higher margin business.
“We’ve delivered on all five thanks to the hard work of all our colleagues. We now have the right team and the right structure that puts us in a strong position to seize the opportunities in this structural growth aviation market.
“As we start 2020, our short term focus is on strengthening the balance sheet and I have put in place a number of measures that I believe will make a material difference during the year.”
Philipp Joeinig, executive chairman, said: “We are currently experiencing some headwinds due to the impact of COVID-19 on our activities but in the medium and long term we see genuine opportunities for growth.
“In 2020, we have two goals. Firstly, a significant reduction in our leverage position by the end of the year through focusing on cash and capital expenditure management. Secondly, to achieve continued growth by expanding our services to support customer growth and by moving into new higher yielding markets.
“With the investment we have made in our people this year, I am confident we have the right team to deliver. We now have a Board with a proven track record in the industry, a strengthened Executive Management Team and strong regional leaders pulling together in the right direction.”