John Menzies plc today issues a trading statement ahead of its results for the year ending 27 December 2003, which will be announced on Tuesday 16 March 2004.

 

 

"I am pleased to report that we are on track to deliver full year operating results ahead of current market expectations. We are now reaping the benefits of the management actions taken to improve performance including stronger capital discipline, tighter working capital management, a streamlined management structure and cost reductions.  As a result we have achieved strong free cash flow in 2003."

 

 

Distribution has had an excellent second half, out-performing market expectations. In particular it has benefited from tight cost control, cover price increases and a strong performance from Partworks.  We continue to invest in this business to provide the highest levels of customer service for both publishers and retailers. 

 

We currently await the outcome of the DTI's investigation into the newspaper distribution marketplace and continue to work with all industry groups in this regard.

 

 

Aviation performed well in the second half of the year and aided by a more stable marketplace traded in line with expectations. The focus on return on capital and the simplified management structure implemented in September 2003 are now delivering real benefits. However, this will result, as previously noted, in an exceptional cash charge in 2003. We will continue actively to reposition this division to meet changes in the marketplace. 

 

 

Projected Head Office cost savings are on track, with the corporate centre now re-shaped to service the Group's needs more effectively. As previously indicated, the Group's pension position as calculated under SSAP 24 will result in a pension charge for the full year of £1.2m.  The Board has decided to adopt FRS 17 in 2004 to provide investors with greater clarity of earnings going forward. This will lead to an increase in the P&L pension charge for 2004, resulting in a charge more in line with current cash contributions of £4m - £5m.

 

The Board also intends to review the carrying value of certain of its Aviation and Group assets, which may result in a write down in their carrying value.

 

 

Distribution is tightly managed and is committed to delivering excellent customer value.  Aviation is being repositioned to perform in current market conditions and benefit from any market uplift. The outlook for the Group in 2004 is positive.   

 

 

 

 

 

 

John Geddes, Head of Investor Relations, 0131 459 8186 / 0779 6336173

 

 

Jonathan Rooper, 0207 930 0777