Menzies records profits increase despite ongoing CMA investigation

Scottish logistics firm John Menzies has announced a positive end of the first half of the 2017/18 financial year, with profits ramping up 15.4% thanks to a boost from higher cargo volumes, new operations and new deals in Europe, the Middle East and Africa in its aviation division.

Underlying operating profits at Menzies Aviation, which provides ground handling, cargo and fuel services, grew by 9.2% to £23.7m in H1. Profit before tax rose to £28.5m from £24.7m in the same period last year.

The company said that ground handling services and positive cargo volumes in key summer months have allowed for a good start to the second half of the year, adding that it is on track to meet full-year targets.

However, Menzies’ profit boost comes after UK competition regulator, the Competition and Markets Authority (CMA), referred the company for the planned purchase of Airline Services, which has raised competition concerns.

Menzies purchased the trade and assets of UK aircraft de-icing specialist Airline Services in a bid to boost its presence in the country. “As Menzies and Airline Services are close competitors at these airports, the deal could result in less choice for airlines operating there, potentially leading to higher prices and lower quality services,” the CMA said.

Both companies supply British airports and airlines with de-icing, ground handling and maintenance services. As a result, the regulator said it had found competition irregularities regarding de-icing services at Edinburgh, Glasgow and London Heathrow airports, while similar ground handling problems were registered at London Gatwick and Manchester airports.

The CMA said it will reach a decision on the investigation in late January 2019, adding that Menzies had chosen not to offer proposals to address these concerns.

Last year, John Menzies attempted to merge with UK mail delivery company DX Group, but the two companies failed to agree on terms and the deal collapsed.