John Menzies looks to expand in cargo despite volume decline
29 / 09 / 2020
By Damian Brett
Ground handler John Menzies saw its cargo volumes decline in the first half of the year but is looking to expand in the sector.
The company reported a “resilient” performance in its cargo business as volumes dropped by 22% year on year as a result of reduced bellyhold operations due to the coronavirus outbreak.
However, the company pointed out that it has won a major new contract with Qatar for handling cargo at London Heathrow.
Since the end of the half year period it has won further cargo business with Qatar Airways in Los Angeles, Menzies’ fifth contract award with Qatar this year.
Looking ahead the company said it will look at further opportunities for expansion in the cargo market.
John Menzies’ executive chairman Philipp Joeinig said: “We have made significant strides expanding our cargo handling portfolio in the first half. Given the current market outlook, we will look at further opportunities to rebalance our portfolio with further expansion in the cargo market.”
He added: “On the basis of current visibility and assumptions for ground handling and cargo volumes second half revenue is expected to be at a similar level to the first half with profitability benefiting from a more significant contribution from various government support programmes and continuing tight cost management.”
Overall, the company saw its half-year revenues decline by 33.6% to £431.5m, while it reported an operating loss of £70.3m compared with a profit of £5.4m last year. It reported an overall loss of £88m.
Joeinig said: “The first six months of the year have seen us operate in unprecedented times due to the Covid-19 pandemic. The impact on our global operations has been material, but I am very pleased with how we have reacted. We acted decisively to reduce costs and moved to right-size our operations.
“As a result, our liquidity position is good, and we are well placed to navigate through the winter season and beyond. Due to the actions taken in 2019 to re-shape the business commercially, we are making real progress, winning new contracts, particularly in cargo, and I expect this to continue in the second half.
“Expansion opportunities are emerging, and we will selectively look to take advantage of the current situation. Like others in aviation, we know we are not out of the woods yet. 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.”
Meanwhile, its forwarding business, AMI, bucked the overall trend at the company and saw first-half revenues improve to £72.1m, compared with 2019’s £70.9m, and operating profits reached £1.9m compared with £1.8m last year.
It said that AMI has performed strongly during the year and is trading ahead of expectations.
“AMI has benefited from a shortage of cargo capacity across the world as passenger flights were grounded,” the company said. “This led to an upturn in bookings and a general improvement in rates across the business.
“The business reacted swiftly and innovatively to the shortage by chartering aircraft and filling them with cargo demand on key trade lanes to meet customer requirements.”