Aviation impact

Menzies suspends dividend in wake of coronavirus

Menzies Aviation

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.”

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