Major Scottish logistics and distribution firm John Menzies hit the acquisition trail yesterday as it reported a £2 million increase in first-half pre-tax profits.
The company’s aviation services subsidiary announced the combined £14.1m purchase of two new ground handling businesses Australia’s Skystar and Colombia’s Desacol in line with its strategy of increasing its exposure to international growth markets.
Skystar operates at eight airports in Australia and New Zealand and handles ground operations for 10 airlines including national carrier Qantas.
Desacol has operations at five airports in Columbia and handles 60,000 turnarounds and 50,000 tonnes of cargo every year.
Both acquisitions are expected to be completed shortly the Skystar purchase is subject to approvals in New Zealand and are being funded from existing debt facilities.
They are both expected to be immediately earnings enhancing with full benefits coming through next year.
“The acquisition of Skystar is an excellent consolidation play for Menzies in the important markets of Australia and New Zealand,” Aviation managing director Craig Smyth said.
“Desacol is a very exciting development into a new attractive market, as well as expanding our relationship with some key new low-cost and national carrier airlines.”
The purchases come as parent group John Menzies announced it had increased turnover to almost £1 billion in the first half of the year.
The £997.9m return up from £988.4m a year earlier helped the firm to increase pre-tax profits by £2m to £18.4m.
A “good result” from the aviation business which won 50 new contacts and lost 15 during the first half saw it contribute sales of £361.3m in the period while the distribution division was responsible for revenues of £636.6m.
The firm said the distribution arm which handles deliveries for a number of publishers had experienced a “challenging” six months with magazine revenues falling by 11.4% and an uplift provided by Euro 2012 not being repeated this year.
However, newspaper revenues were up 3.8% during the first half on the back of a number of contract renewals and new business secured from News International and Marketforce.
The company also slashed £3.2m of costs from the business during the period.
Menzies which declared a 5% increase in the interim dividend to 7.5p yesterday said it was well positioned for future growth with a strong balance sheet.
“Despite challenging markets, the group remains on track with an unchanged strategy delivering further growth at Menzies Aviation and cost mitigation actions at Menzies Distribution,” chairman Iain Napier said.