John Menzies has ploughed £14 million into expanding its baggage handling business after another tough six months for its magazine and newspaper distribution arm.
The group, which started out as a newsagent in Edinburgh 180 years ago, revealed the £7.7 million purchase of Australian ground handling business Skystar and a deal worth up to £6.4 million for Colombian cargo company Desacol.
Magazine closures and the absence of a major football tournament drove profits in its distribution arm 12% lower during the first six months of the year, but its aviation business, which works at 134 airports across the globe, grew profits 10%.
Edinburgh-based Menzies said higher pension charges knocked underlying pre-tax profits 3% lower year-on-year, but bottom line profits were up 12% to £18.4 million. Revenues edged up 1% to £997.9 million.
Menzies said its aviation business had another strong six months, winning a net 35 new contracts. I t grew operating profits to £15.5 million from £14.1 million a year earlier despite airlines continuing to cut costs.
Chairman Iain Napier said the acquisitions will grow its market share in new and existing locations.
Skystar, which works from eight airports across Australia and New Zealand, handles 17,000 aircraft turnarounds annually and serves airlines including Jetstar and Quantas.
Desacol works at five airports in Colombia, handling 60,000 turnarounds and 50,00 tonnes of cargo a year. Menzies said it will help expansion into other Latin American countries.
But the group is battling tough conditions in its UK distribution business, which handles around five million newspapers and two million magazines daily, serving more than 25,000 customers.
The closure of print editions of magazines including Autotrader, More and Easy Living plus the absence of last year's boost from Euro 2012 drove like-for-like magazine revenues 10.8% lower. Newspaper revenues dipped 1.8%.
Profits in its distribution arm fell to £11.8 million from £13.5 million a year earlier, but Menzies said it has cut costs by £3.2 million and is expanding marketing services such as direct mail for charities and travel firms.
The group said trading across both distribution and aviation is in line with its expectations.
It said: "Difficult economic times persist but we are well placed to continue to deliver shareholder value."
Analysts at N+1 Singer said it was a "solid first-half result despite difficult markets".
They added: "The entry into the South American market is potentially significant and demonstrates the group's strategy of making considered investment to expand into key target markets worldwide."
The company traces its roots back to 1833 when John Menzies opened a newsagent in Edinburgh. The group sold its chain of stores to retailer WH Smith in 1998 for £68 million to concentrate on distribution and handling.