Menzies on track for revenue growth in “commercially challenging year”

posted on 20th November 2018 by Justin Burns
Menzies on track for revenue growth in "commercially challenging year"

John Menzies – the parent company of Menzies Aviation – has reported it expects to achieve an eight per cent per annum revenue growth target as it moves into 2019 and beyond.

The news was revealed in a trading update for the period 1 July 2018 to 31 October 2018 and it added it is continuing to trade ahead of 2017 and is on track to meet expectations for the full year.

Menzies said 2018 has been a “commercially challenging year” and revenue growth has slowed, primarily due to licences not renewed, some contracts lost and the exiting of less favourable contracts.

Despite these headwinds, throughout the period the company said it has gained significant new business winning 34 net contracts generating £8 million of annualised revenue. Notable gains include hub operations with Sunwing in Toronto; Czech Airlines in Prague; and Singapore Airlines in Sydney.

Menzies also opened a new business in Jakarta, Indonesia and it sees this region as one of great potential and said it looks forward to “win further contracts during 2019”.

It also renewed key contracts such as with American Airlines for aircraft fuelling contracts at 24 locations across the US.

In the US, it said previously highlighted labour challenges in North America are being addressed and it has been “successful in gaining significant price increases to help mitigate the increased staff costs” and this progress will help to reduce staff turnover and the costs associated with it at the same time as providing greater operational stability.

Menzies said margin improvement is the primary focus of management and it will continue to “demonstrate our ability to win business at rates we believe to be sustainable and will continue to price all contracts accordingly”.

The company believes continuing investment into people, processes and technology which deliver productivity benefits and service delivery for customers, to be a “sensible strategy” that will deliver further growth.

John Menzies chief executive officer, Forsyth Black said: “I am pleased that we are continuing to make solid progress against our strategic objectives. Our focus on excellent service delivery is key to our success and continuing to deliver on our margin improvement plans will drive better returns.

“Looking forward, there is no doubt that our industry is evolving with the introduction of fuel efficient composite aircraft, a greater focus on on-time performance and the need to deliver great customer experiences. We aim to be at the forefront of the evolution as we strive to position ourselves as the logistics partner of choice to our airline customers.

“To do so we will deliver the highest standards of service underpinned by our extensive risk management solutions and our innovative technological solutions.

“We have invested in and built a strong platform for growth and will strive to lead the industry with the technological service offering that underpins the delivery of safe and secure on-time performance.

“We continue to be excited by the opportunities available to us and we believe we are excellently placed as a pure play aviation services business in a structural growth market.”