(Alliance News) - John Menzies PLC on Tuesday suspended its dividend over the covid-19 outbreak, posting a smaller annual profit on finance exceptional items charges.
The aviation services company reported a GBP17.3 million pretax profit for 2019, a 20% reduction from 2018's figure of GBP21.67 million. This came despite a 3.1% increase in continuing operations revenue to GBP1.33 billion from GBP1.29 billion.
This revenue drop was because the company incurred a GBP15.6 million exceptional items charge relating to "restructuring, pension and impairment", compared to just GBP1.8 million in 2018. On top of which, finance charges excluding retirement benefit obligation interest climbed 79% to GBP22.5 million from GBP12.6 million.
The firm suspended its annual dividend over the coronavirus outbreak, having paid out 20.5 pence in 2018. The company described the headwind resulting from covid-19 as "very disappointing".
John Menzies said: "Given the impact of covid-19 on the operations of the group in 2020 and the ongoing uncertainty of the extent of the impact on the aviation industry, the board believes it prudent and in the best interests of shareholders to suspend the dividend temporarily. The board is therefore not recommending a final dividend payment for the year."
Executive Chair Philipp Joeinig said: "We are currently experiencing some headwinds due to the impact of covid-19 on our activities but in the medium and long term we see genuine opportunities for growth.
"In 2020, we have two goals. Firstly, a significant reduction in our leverage position by the end of the year through focusing on cash and capital expenditure management. Secondly, to achieve continued growth by expanding our services to support customer growth and by moving into new higher yielding markets."
John Menzies has set its net debt to earnings before interest, taxation, depreciation, and amortisation leverage ratio target at 2 to 2.5 times by 2020 end. It was 2.86 times at the end of 2019 and 2.41 times at the end of 2018.
Shares in John Menzies were up 1.6% at 256.00 pence in London on Tuesday morning.
By Anna Farley; annafarley@alliancenews.com
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