Sars takes its toll on John Menzies' profits

John Menzies, the newspaper distributor and airport services company, reported a near 22 per cent fall in profits yesterday as the impact of the Sars virus took its toll, although newspaper price increases helped offset some of the damage.

The company, which sold its chain of newsagents in 1998, said newspaper and magazine cover price increases helped push up profits at its distribution arm, its biggest business, by nearly 3 per cent.

But its aviation division, which handles baggage and cargo at airports, made an operating loss of £0.6m in the first six months of the year - the same loss as a year ago.

Both divisions are, however, forecast to turn out a better performance this year than last. "The guidance we gave in July was that we expect both divisions, before pension charges, to do slightly better than last year and we see no reason, at present, to change that guidance," the chief executive, Patrick Macdonald, said.

In the six months to 28 June, John Menzies recorded a pre-tax profit, before accounting for goodwill amortisation and exceptional items, of £8.3m - down from £10.6m last year. Sales rose 2.5 per cent to £614m.

The company said its distribution arm benefited in particular from "the end of the tabloid cover price war", and stronger magazine sales, particularly women's titles.

The company also reiterated previous guidance that it planned to restart cash contributions to its pension scheme at an estimated cash cost of £4m to £5m this year.