(Sharecast News) - Aviation support services John Menzies saw sales fall by a third and deep losses at the half-year stage, but predicted that top-line growth was set to level off over the backhalf of 2020 while profitability was set to benefit from "more significant contributions from various government support programmes".
Furthermore, cost-cutting and a drive in 2019 to right-size its operations resulted in underlying operating cash flows more than doubling over the six months ending on 30 June, from £58.9m to £131.3m, while free cash flow jumped from £26.8m to £109.5m.
Reported revenues meanwhile were down 33.6% at £431.5m, as passenger flight volumes fell 43%, with the company moving from an underlying profit before tax of £8.2m to £48.7m of red ink, for a basic loss per share of 104.7p.
Yet company boss, Philipp Joeinig, sounded a cautious note.
"Like others in aviation, we know we are not out of the woods yet," Joeinig said
"We continue to keep a strong grip on our costs, whilst encouraging governments across the world to react to the exceptional impact Covid-19 continues to have on the industry and extend their support schemes, as recovery will be gradual."
To take note of, the company highlighted progress in reshaping the business and new contract wins in the cargo space.
Since period end, the outfit had won new cargo business with Qatar Airways in LA and the ground handling and cabin cleaning business of Air France/KLM in Toronto.
On the outlook, Menzies added: "We currently anticipate market conditions will remain challenging through the winter and the early part of next year, but expect a sustainable recovery in activity levels thereafter, contributing to modest revenue growth in 2021 over 2020.
"Whilst cautious on the pace of activity level recovery over the next 18 months, our restructured cost base and the rationalisation of the global portfolio should enable the Group to generate higher returns as volumes improve."
The company also judged that it would be capable of riding out even the worst - yet plausible - scenarios going forward.
"The Group has modelled a severe but plausible downside scenario based on further waves of the pandemic.
"[...] In the event that this downside scenario were to occur, the Board believes that there would be sufficient mitigating actions that could be taken to ensure the Group's ability to continue as a going concern."
Available cash resources as at 31 August stood at £175m.
No dividend was declared in respect of the first half of the year.
As of 1010 BST, shares of Menzies were down by 1.07% to 110.6p giving Menzies equity a market value of roughly £94.6m.
8 Nov 2019 15:56