John Menzies PLC (LON:MNZS) saw higher cargo volumes and new contracts in its aviation business drive first-half profits higher, but the good news was offset by the announcement of a competition probe into its recent purchase of Airline Services Limited.
The FTSE Small cap logistics firm said its underlying pre-tax profit increased by 15.4% to £28.5mln, up from £24.7mln a year earlier, as turnover rose by 4.5% to £1.25bn.
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The group – which last month agreed to sell its newspaper distribution business to private equity firm Endless LLP – said its Menzies Aviation arm, which provides ground handling, cargo and fuel services, saw first-half underlying operating profit rise by 9.2% to £23.7mln.
Menzies said the second half of the year started well with ground handling turns in the key summer months in line and cargo volumes delivering good returns.
The company added that it was on track to meet its full-year expectations, with trading since the half year in line.
Menzies said it was maintaining its interim dividend at 6.0p notwithstanding the newspaper distribution business disposal.
In early morning trading, Menzies shares held steady at 645p.
Competition probe
Meanwhile, in a separate statement, the UK competition regulator announced that it is referring to Menzies' purchase of Airline Services for an in-depth merger investigation.
The firm bought the trade and assets of Airline Services, a UK-based aircraft de-icing specialist, in April this year to boost its UK presence.
The Competition and Markets Authority (CMA) said: "As Menzies and Airline Services are close competitors at these airports, the deal could result in less choice for airlines operating there, potentially leading to higher prices and lower quality services."
The regulator said it identified competition problems regarding de-icing services at Edinburgh, Glasgow and London Heathrow airports, and ground handling services at London Gatwick and Manchester airports.
The CMA said that Menzies chose not to offer proposals to address its concerns. Menzies said it will continue to work with the CMA.