John Menzies says 'Gatwick issues' hit annual profits

Contractual problems at London Gatwick Airport last year cost logistics group John Menzies £6m in lost earnings, according to the company.

In its annual results statement, the firm said profits were hit by increased labour costs incurred in maintaining ground handling service levels.

It added that the "contractual position" had now been resolved and it did not anticipate any further issues.

Overall pre-tax profit for the year was down by about 30%, at £18.2m.

The group's turnover for the year was flat at just under £2bn.

In January, the Edinburgh-based company's chief executive, Jeremy Stafford, resigned after just 15 months in the post, citing "personal reasons".

His departure came a few weeks after Menzies issued a profits warning following problems with its contract at Gatwick.

'Challenging year'

Overall, turnover for the aviation division was up 6%, at £782.9m, while underlying operating profit was £6m lower, at £24.2m.

Menzies said growth in the division was underpinned by strong cargo volumes and the "positive effect" of earlier ground handling hub wins in North America and Scandinavia.

The company reported that its distribution wing outperformed its expectations, with underlying operating profit increasing by more than £1m to £25.1m.

It added that the trading performance benefited from cost savings which offset issues such as the decline in print media revenue.

Chairman Iain Napier said 2015 had been a "challenging" year for the group but added: "The board is confident that we have strategies available to us in both of our operating divisions capable of delivering growth.

"We continue to evaluate the optimum structure for the group to potentially further enhance shareholder value."