John Menzies suspends dividend over coronavirus
John Menzies will temporarily suspend its dividend for this year after warning of an expected 2020 profit blow from coronavirus.
The coronavirus outbreak prompted Menzies to issue a profit warning last month, saying it expects a hit of between £6m and £9m if the outbreak subsides towards the end of the second quarter.
The aviation services firm’s base in Macau to service Chinese carriers is exposed to the Covid-19 outbreak.
Executive chairman Philipp Joeinig said: “We are currently experiencing some headwinds due to the impact of Covid-19 on our activities but in the medium and long term we see genuine opportunities for growth.”
Menzies added:
Given the previously stated impact of Covid-19 on the operations of the group and the ongoing uncertainty of the extent of the impact on the aviation industry, the board believes it prudent and in the best interests of shareholders to suspend the dividend temporarily.
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The figures
Menzies posted a drop in profit before tax for 2019 to £17.3m, a fall of almost 20 per cent on 2018’s £21.6m. Menzies blamed the grounding of Boeing’s 737 Max aircraft and the collapse of Thomas Cook for the dent to profit.
It also pointed to the loss of exclusive contracts in the Dominican Republic and Panama.
Basic earnings per share dropped from 14.6p to 10.8p over the same period.
However, revenue grew from just under £1.29bn in 2018 to £1.33bn. And cash flow increased from £94.9m to £134.9m.
Menzies’ profit warning follows other companies warning of a hit from the Covid-19 virus. They include the likes of brewer Diageo, which has predicted a £200m drop in profit.
Uncertainty remains over how coronavirus will affect the overall world economy in the long term.
Coronavirus fallout continues
Billions of dollars were wiped off global stocks yesterday after oil prices crashed 30 per cent.
The coronavirus originated in China at the turn of the year. It has since spread across the world, causing stock market havoc as travel restrictions disrupt supply chains and consumer spending falls.
In addition to the automotive and retail sectors, the airline industry has been badly affected.
Carriers including Quantas and Cathay Pacific have reported a reduction in flight bookings.
In the UK, regional carrier Flybe collapsed last week due to both a fall in revenue caused by the coronavirus disruption and long term financial issues.