News distributor and airport ground handling group John Menzies today signalled a positive start to the year as its aviation arm continued to recover.

The division, which provides passenger, support and cargo services to airlines, posted a 10.8% rise in operating profits to £4.1 million in the year to December 27.

This came despite difficult trading conditions earlier in the year, when the firm's operations in Hong Kong and Macau were hampered by the Sars virus.

The operation had already suffered from the knock-on effects of the September 11 terrorist attacks in 2001.

Edinburgh-based John Menzies said the adverse impact of Sars on profits was £1.6 million. But the division went on to deliver a stronger second half performance and posted a 1.2% rise in turnover to £239.7 million.

Overall the group achieved a 15.1% rise in operating profits before pension costs of £25.2 million, which it described as an "encouraging result".

However, headline pre-tax profits after these costs were £23.9 million - £2 million lower than last year's figure.

Profits lifted 8.7% to £31.2 million at the group's core newspaper and magazine distribution arm.

The division was boosted by newspaper price increases and strong magazine launches, including new men's titles and the expansion of Partworks collectors' magazines.

Chief executive Patrick Macdonald said: "Both divisions have entered 2004 positively. I believe we are well positioned and look forward to making further progress this year."

Overall turnover for the group was £1.2 billion, up 3.7% on last year, while a final dividend of 12.6p was recommended, maintaining the full year dividend at 18.1p.

Trading in North America remained difficult and the company said it was focusing on reducing costs and winning new business there.

However turnover in Latin America and the Caribbean increased by 3.1%, with the region remaining "profitable".

Tuesday March 16, 2004