JOHN Menzies has landed in South America and strengthened in Australia as its aviation arm continues to offset weakness in its traditional print distribution market.
Menzies has acquired Decasol, a Colombian ground and cargo handling business, for up to £6.4 million and says it is a "bridgehead for further opportunities in other countries" in the region.
Based in Bogota, Decasol handles 60,000 turnarounds and 50,000 tonnes of cargo for existing Menzies customers.
Craig Smyth, managing director of Menzies Aviation, said: "Desacol is a very exciting development into a new attractive market, as well as expanding our relationship with some key new LATAM low cost and national carriers."
The group is also paying £7.7m to acquire Australian ground handling business Skystar, which operates at eight airports throughout Australia and New Zealand handling 17,000 turnarounds a year for 10 airlines including Jetstar and Qantas.
It gives Menzies entry into Perth airport - a key gateway.
Mr Smyth said the deal was an "excellent consolidation play for Menzies in the important markets of Australia and New Zealand", fitting well with existing successful operations.
Both acquisitions would be funded from existing debt facilities and would be fully earnings enhancing next year.
Paula Bell, Menzies's new finance director, commented: "Both businesses will bring around £15m of revenue into the group. We are quite excited about the growth potential going forward."
Menzies was reporting on a solid half-year, which saw the aviation arm deliver a 10% increase in operating profit to £15.5m.
The group won 50 contracts and lost 15 in the period, with only four lost on pricing.
Menzies said: "Yield pressure continues to be applied by airlines and this is reflected in the underlying performance of the ground handling business.
"However, our track record reinforces our belief that customers choose and stay with Menzies Aviation for our superior service offering."
Ground handling accounts for 63% of the aviation business and is likely to grow in importance.
Cargo tonnes shrank by 14.5% following the closure last year of operations in the US and UK including Glasgow, but like-for -like business was down only 2.6% in line with the industry, and operating margins rose from 4.7% to more than 6%.
Falling sales in the magazine market put pressure on Menzies Distribution in the first half, which also did not enjoy the Euro 2012 boost of last year.
Magazine revenue fell 11.4% (like-for-like down 10.8%) during the period which was worse than anticipated, while newspaper revenues were up 3.8%. Like-for-like sales fell 1.8% in line with expectations. But three major contract renewals, adding to two in the second half of 2012, underpinned 60% of last year's revenues, while bolt-on business Orbital Marketing Services had been successfully integrated, using the Menzies network for brochure distribution.
Ms Bell said the division's diversified businesses were now contributing £5m of operating profit on an annualised basis, while cost-savings had yielded £3.2m.
She added: "We are very efficiency focused, at the same time as concentrating on areas that give us future business growth."
Pre-tax profit was up 12% to £18.4m, on turnover up 1% at £998m.
Chairman Iain Napier said the group was "well positioned to progress in the second half" and the 5% rise in the dividend to 7.7p signalled its confidence on future prospects.
The shares fell back 17.5p, or 2.3%, to 742p but are up 17% this year.
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