John Menzies 'needs year' to prepare split
John Menzies, the aviation and print distribution business, has said it could take up to a year to prepare for a split of its two divisions.
With its half-year results, the new chairman said the move would be complex as it affects the pension scheme.
The Edinburgh-based company is under pressure from a German shareholder which has just bought a 7% stake.
It wants to split the ground handling operations from the distribution division.
The latter has suffered from the downturn in newspaper circulations, down 3.7% in the first half of the year, and magazine sales, down 4.7%.
That was partly offset in its six-month results by collectable stickers linked to the UEFA European football championship, and by the expansion into online shopping deliveries.
John Menzies is using its overnight newspaper delivery vans for daytime work.
It says that efficiency has helped it win a three-year national distribution contract supplying retailer WH Smith.
Boardroom tensions led to four members of the board departing earlier this year, including the former chief executive and former finance director.
One of the four newly appointed directors is Dr Dermot F Smurfit, who became chairman last month, who told shareholders: "One of my tasks will be to review the structure of the group in order that we can maximise shareholder value.
"This will include looking at whether our two operating businesses are best placed to prosper while they are part of one group.
"The situation is complex, particularly with regard to our pension schemes. Management have already engaged with specialist advisers and our pension trustees, and work is underway to structure the pension scheme in such a way as to give the board the maximum amount of flexibility in future. I expect this work to take up to 12 months."
In its results for January to June, John Menzies reported revenue flat at just over £1 bn. Profits fell by nearly half to £3m.
The aviation division moved out of loss, while distribution made a £12m profit.
The company said the Brexit vote leaves uncertainty, but it hopes to gain from earning 80% of its aviation income in currencies other than sterling, which convert into sterling at rates that help boost results.
The company's aviation business operates at 149 airports in 32 countries. Its distribution division employs 3,500 people from 43 different sites across Britain and Ireland, delivering around six million newspapers and magazines each day.
Also affected by the downturn in the newspaper industry, Johnston Press was given a "negative" rating Moody's the credit rating agency, down from "stable". This follows weak half year figures published earlier this month by the owner of The Scotsman, The Yorkshire Post and around 200 local titles.
The rating said the results highlighted the risk to liquidity, despite the company's ability to generate cash through newspaper cover sales. It said there is concern that the publisher could break the covenant conditions on one of its loans.