Tens of millions of pounds was wiped off the value of Scottish logistics and distribution firm John Menzies yesterday after it issued a profits warning.
Shares slumped by more than a quarter in morning trading after the Edinburgh-based firm said it expected profits within its aviation arm to be “materially lower” than board expectations.
The firm also admitted the impact on the division, which has encountered difficulties in the UK market, could continue into the coming financial year.
Menzies said Craig Smyth, a board member since 2007 and managing director of the aviation division, had left with immediate effect in a swift change of leadership to address the problems.
On the bright side the global aviation services provider and print media distributor said in its latest quarterly report that Menzies Distribution continues to deliver results in line with expectations.
Overall sales values from both the magazine and newspaper categories were better than anticipated and cost reduction initiatives remained on track.
Performance within Menzies Aviation had been mixed, however.
Revenue was up 8% on the same period last year and absolute ground handling turns were up 15% including the Delta Airlines contract in Detroit where turns are high but revenue low due to the mix of aircraft type.
Cargo handling tonnes were up 8%.
New ground handling business in North America included contracts in Toronto for WestJet and in Denver with United Airlines.
With the Delta Airlines business, the positive momentum in North America was partly offset by contract losses in Colombia.
New business had been secured and four new cargo facilities opened across Canada to handle a five-year contract for KLM/Air France, and John Menzies had a good platform in the Canadian market.
Cargo returns were behind expectations in Australia due to the cargo mix being weighted towards lower-yielding shipments.
However, Menzies said its UK operations had been facing a number of challenges, with significant changes at London Heathrow substantially reducing margins.
The company told investors yesterday that its new group executive team would attempt to address the under-performance in aviation and review strategic, operational and investment plans to improve the situation in the coming months.
Shares in Menzies closed the day down 28.09% at 350p yesterday.
The single day price crash wiped around £83 million off the company’s overall market value.