LOST LUGGAGE: John Menzies closed air cargo-handling operations at Glasgow and three English airports.
The Edinburgh group has come under pressure in recent years as air freight volumes plunged during the global recession and a continuing fall in newspaper and magazine sales hit its distribution arm.
The latest stage of its revamp saw Menzies, which dates back to 1833, close air cargo operations at Glasgow, Manchester, Birmingham and East Midlands airports.
It also closed a cargo-handling operation in Chicago, leading Menzies to book £18.4m of one-off costs, taking pre-tax profit including exceptional items to £32m against £52.5m in 2011.
Finance director Paul Dollman said yesterday: "Chicago and the UK cargo business used to be called the 'ugly sisters'."
He added: "Glasgow was a business that just had too many suppliers in it. We were probably the weakest player in this particular segment. The Commonwealth Games will give a short-term lift but once that is gone?"
The move has reduced the aviation business's reliance on cargo to be more orientated towards ground handling.
Menzies also closed four branches in its distribution arm.
"We have taken action either to shrink the distribution business so it is fit for purpose or in aviation to address structural issues we have had," Mr Dollman said.
He added: "We get the benefit in 2013 of the actions we took in 2012."
Group revenues for 2012 were down 0.8% to just under £2 billion. Underlying operating profit at its aviation business, on a constant currency basis, rose 16% to £32.3m.
Mr Dollman said that in aviation, demand had not returned to levels before the global recession although some markets such as Australia and South Africa remained strong.
"We have seen a big bounce-back but we are not back to where we were: the mature markets are still slightly weaker," he said.
He said after making three bolt-on acquisitions for its aviation arm last year the company would continue to look at opportunities for purchases.
Meanwhile, at its distribution business, turnover fell by 3% reflecting falling volumes in the core business as magazines, particularly celebrity magazines targeted at women, struggled to retain sales.
Despite this, operating profit was flat on the previous year at £28.8m as the company benefited from rising newspaper prices.
In November Menzies bought Orbital Marketing which distributes travel brochures to travel agents. "It is a synergy play for us," Mr Dollam said. "We have got the infrastructure around the UK."
Mr Dollman will step down as finance director at its annual shareholder meeting in May to be replaced by Paula Bell from engineering consultancy Ricardo.
The company raised its final dividend 5% to 17.85 pence a share, which will be paid on June 21. Chairman Iain Napier said: "Market conditions remain tough but despite this we continue to deliver our targets."
Menzies sold its retail operations in 1998. Shares closed up 37p or 5% at 785p.
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