Menzies Distribution, which distributes newspapers and magazines produced an operating profit of £14m in the first half of 2012, up from £13.7m last year, despite a 3.7 per cent fall in sales to £648.2m.
Parent group John Menzies plc said a branch rationalisation within the Scottish central belt and further changes in Yorkshire and the East of England were successfully implemented in the first half. Projected efficiencies following the implementation of SAP are being delivered and this, together with other cost saving initiatives leave the division well on track to deliver its targeted savings for the year. The roll out of SAP into the operations in Ireland is underway and the full benefit of its implementation is expected to be realised early next year.
In the newspaper market, volume decline was offset by strong cover price growth with some 12 titles increasing cover price during the period, it said. As a result, despite sales being 3.9 per cent behind last year, the category was marginally earnings positive.
“The launch of the Sun on Sunday has had a detrimental effect on the Sunday newspaper market as a whole as it has a lower cover price than The News of the World and has gained volume from other higher margin titles. However, overall the demise of The News of the World and the launch of the Sun on Sunday has not materially affected the financial returns from this category.
“Within the magazine category monthly titles (down 4.4 per cent) performed better than weekly titles (down 8.4 per cent). Magazines are still under pressure from UK economic conditions. Sales of monthly titles remain more resilient than weekly titles where price cutting is fierce in the crowded celebrity magazine category, although both were slightly boosted by Jubilee related product.
Menzies Distribution handles around 5 million newspapers and 2.1 million magazines each day, with deliveries to more than 25,000 customers. The division employs 4,000 people at 39 sites throughout the UK.
Sales at Menzies Aviation increased by 2.3 per cent to £340.2m, with underlying operating profit up £0.7m to £14.5m. Total group operating profit rose marginally to £25.4m despite a fall in sales to £988.4m