Weak cargo volumes push John Menzies into losses

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John Menzies has fallen into losses in the first half of 2019 due to weaker cargo volumes and the grounding of Boeing 737 MAXs.

Losses in the first half amounted to £4.4 million compared to a profit of £8.3 million in 2018, though revenue increased from £627.2 million last year to £649.9 million.

Giles Wilson, formerly chief financial officer who took over as chief executive officer in June says weaker global markets in the first half of 2019 has seen a reduction in flight schedules, cargo volumes and yields.

The company also faced challenges including ending the Hyderabad cargo joint venture and costs related to disposing of Menzies Distribution.

A cost and efficiency programme has been implemented to save £10 million, with the majority realised by 2020.

The global commercial team has been restructured with a new sales-based incentive programme put in place to ensure a return to organic growth.

Wilson says: “We continue to drive a company-wide focus on cost reduction, customer engagement and operational discipline, with profitable growth at the forefront of our agenda. We have an increased awareness of our customers’ needs that will ensure that we are viewed by our customers as the partner of choice and recognised for our best in class operational delivery.”

The cargo forwarding division, Air Menzies International posted a resilience performance in a challenging market where UK exports were lower and e-commerce slowed in the USA.

Growth was achieved in South Africa and in Australia where AMI capitalised on the cargo screening regulations utilising additional equipment purchased ahead of the changes.

AMI says it will continue to focus on improving profitability through the rollout of improved IT infrastructure and exploring the possibility of bolt-on acquisitions to help expand the global footprint of the business into new markets.