John Menzies reported a £6million hit to profits from problems at London Gatwick in its 2015 results.
The Scottish aviation and distribution services group said pre-tax profits fell to £18.2million, from £25.7million the year before, on turnover that was flat at just under £2billion.
Edinburgh-based Menzies said the £6million hole in the balance sheet was caused by increased labour costs at Gatwick, incurred in order to maintain contractual service levels.
It added: “The contractual position has now been resolved and we do not anticipate any further issues.”
Menizies had cut its projection for full-year earnings by £2million in November, blaming difficulties at Gatwick.
At the time, it said action to address the problems and to deliver what the client required would cost it £6million in additional investment – mostly on staffing – during the second half of its trading year.
Menzies did not spell out exactly what the Gatwick issues were but at the time of half-year results last August the company said a renewed contract with easyJet had become “operationally challenging” because of a skills shortfall.
The problem was exacerbated by the entry of new handlers into the Gatwick market, which caused a high degree of staff turnover, it added.
Yesterday, Menzies chairman Iain Napier said: “2015 was a challenging year for the group with operational issues at London Gatwick suppressing profits.
“Outside of the UK, the aviation business continued to make progress – particularly in cargo handling and North American ground handling.
“Menzies Distribution performed strongly, whereby print media decline was fully mitigated and our expansion into the e-commerce fulfilment market (online order deliveries) gained real traction with the acquisitions of AJG Parcels and Oban Express, and a number of new contract wins.”
Menzies snapped up Oban Express in November as part of its push to keep its distribution fleet ticking over with parcel deliveries during the day, with a focus on the harder-to-reach areas of Scotland. It bought Inverness-based AJG last summer for £7.5million.
