Menzies Distribution is open to more acquisition opportunities as it continues to diversify its portfolio, aided by a leap in profit in 2021, a debt refinancing and the buy-out of its defined benefit pension scheme.
Revealing its results for the 53 weeks to 1 January 2022, the company reported that revenue increased by £20m in the year, to £943.6m, whilst pre-tax profit came in at £11.1m (2020: £6.6m).
In its strategic report to the results Menzies Distribution said the company had clinched a number of publisher contract renewals throughout the year which have secured 92% of its annual revenue for 2022 and 2023.
It added: “These significant long term contract renewals are a key milestone for the company, providing certainty and security for the business as it looks to expand into attractive, growing and adjacent markets.”
During the year the company also refinanced its debt through the Royal Bank of Scotland, extending its revolving credit facility with the bank from £25m to £39m, to help pay for the debt incurred buying Bibby Distribution Services, now know as Menzies Distribution Solutions, in December 2020. The company’s net debt was reduced in the year to £5.8m (2020: £11.5m).
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In October 2021 Menzies Distribution also sold its pension scheme to a third party specialist provider, derecognising all assets and liabilities with the scheme, which it called a “major strategic milestone – enhancing the balance sheet and future cash generation of the business."
The company also continued its acquisition spree, buying JBT Distribution in June 2021, which boasts annual sales of over £23m. The West Lothian-based logistics firm specialises in retail, healthcare, temperature controlled logistics, packaging and parcel home delivery and has depots in Aberdeen, Inverness, East Kilbride, Lerwick (Shetland) and Kirkwall (Orkney).
The deal saw Menzies extend its geographical reach across Scotland and add a number of blue-chip customers to its base, as well as boosting Menzies’ B2B retail logistics services.
The purchase of JBT closely followed its acquisition of Bibby Distribution in December 2020, which added 38 new operating sites and a large, young fleet to the well-established Menzies platform.
The strategic report said the board is "confident" about the company’s long term outlook. It hailed the company’s “resilient performance in 2021”, adding that this year it plans to expand its diversification portfolio and become “the leading newspaper and magazine distributor across the UK and Ireland.”
Menzies Distribution also has its sight set on further purchases, with the report noting that the company expects to finish 2022 in a net cash position “demonstrating our strength and increasing our ability to fund potential future acquisitions.”