Menzies lifts full-year outlook on better aviation segment – Suppliers Share Wrap


Menzies Group has lifted its forecast for the full year, with Chairman, William Thomson, announcing the company has made a positive start to the year. Menzies' Board now expects the full-year result to be ahead of market forecasts. The improved forecast comes less than a month after Menzies announced it was "trading in line with market expectations".

Menzies’ operations are divided between aviation and distribution businesses. The aviation business has driven the better forecast, with the distribution business “performing in line with expectations”.

According to the company, the aviation business, focused on ground handling, is "benefiting from its geographical spread, a focus on regional densities and the cost reduction efforts made during 2009". Menzies Aviation makes up just under a third of group revenue and posted a GBP1.4 million operating loss in 2009 (or a GBP3.2 million operating profit once JVs/associates were included).

Despite the impact of the Apr-2010 ash crisis, estimated at around GBP2.5 million to the company, Menzies reports its ground handling business has made progress. Underlying earnings during 1Q2010 were boosted by increased de-icing revenue in the early part of the year and a general recovery in trading. Cargo handling benefited from a 20% increase in volumes across Menzies’ network.

The company has also benefited from several contract wins early this year, including Malaysia Airlines in Australia, Emirates in the Czech Republic and a "number of other attractive airlines across the network".

Generally, Menzies Group is continuing with its focus on cash generation and debt reduction. Menzies' shares gained 1.2% yesterday.

Other major movers were HAECO and Aerocentury, which lost 4.5% and 4.4% respectively. Air Partner was up 4.5%, while TravelSky Technology gained 4.7%.

Selected Aviation suppliers’ daily share price movements (% change): 24-May-2010

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