John Menzies said yesterday that it had made a satisfactory start to the year and was continuing to trade in line with its expectations, despite some challenging economic conditions.

The news distribution and aviation services company said its major start-up operations in South Africa, where it has begun activities at six airports providing ground handling services to 41 airlines, and also in India, had moved on apace.

"We have secured more contracts than expected, and as a result have incurred a higher level of start-up costs, which are reducing short-term profitability," it added in reference to the South African operations, but stressed the division is well placed going forward.

In India, Menzies said it started ground and cargo handling operations at the Rajiv Gandhi Airport in Hyderabad in March but pointed out that the opening of Bengaluru Airport in Bangalore has been delayed.

The increased level of start-up costs year on year would most likely have a negative effect on first half earnings, however the related contract gains would have a positive contribution for the year as a whole, the company said.

The shares slipped 14p to 531p.