Scottish logistics giant John Menzies yesterday posted a 40% drop in its profits for 2014, largely due to “operational issues” at its aviation division.
The Edinburgh-based firm warned last year that the division’s ground handling operations at Heathrow would be hindered by British Airways’ decision to switch more flights to Terminal 5, where the airline does more of its own handling.
The opening of Terminal 2 at the London airport also prompted 15 carriers to revise ground handling contracts.
Menzies’ profits have been hit by these developments.
The company, which also has a newspaper and magazine distribution wing, saw pre-tax profits slump to £25.7million from £42.1million a year earlier.
Group turnover fell £400,000 to £1.9billion.
The aviation wing, which provides a range of passenger, ramp and cargo services at 149 airports in 31 countries, also suffered from contract losses in Colombia, while new deals raised start-up costs by £1.9million.
Menzies said its distribution arm, which handles 5million newspapers and 2million magazines daily, put in a more robust performance.
The branch was boosted by sales related to the FIFA World Cup and cost cutting measures that involved a reduction in its facilities to eight from 10.
Menzies chief executive Jeremy Stafford said he was pleased with the distribution arm’s resilience, before adding that while the issues at Heathrow had largely been fixed, they will impact the first half of 2015.
Founded in 1833, the company has recommended a dividend of 16.2pence, 38% down on 2013.
Menzies shares were down 5.22% on the London Exchange as of 4.30pm yesterday.