Journey

Following a significant turnaround exercise, in-flight products to catering services firm Journey (JNY) has achieved a return to profitability.

Led by charismatic chairman Stephen Yapp it has stripped costs out of the business, and sold off non-core operations. With its borrowings repaid, Journey is now sitting on nearly £2m of cash, combined with available debt facilities of £2.5m it is now back on the growth trail.

In the six months to June, sales soared 26% to £20.1m, as operating profits came in at £207,000 (2010: £1.6m loss). Market conditions in the international aviation industry are looking up - passenger traffic is up 6.4% in the year to July and load factors have also firmed.

Now focused on two businesses (products and catering), it recently secured a major contract with Delta Airlines to design and supply the meal service items used for both its international and domestic premium cabins. In catering the main thrust is the US market, here it has a unique and patented system of delivering meals on-board. The Los Angeles facility has plenty of latent capacity so is on the lookout for new business, in addition Journey is exploring the potential of a second hub.

Speaking to Growth Company Investor Yapp said 'this is the first time in five years that cash is not an issue.' Having secured the gong for 'Caterer of the year' for the third consecutive half year, Journey is clearly doing something right.

Recently appointed Singer Capital Markets is shortly due to issue a forecast, but outgoing broker Peel Hunt predicts 2012 pre-tax profits of £900,000. Valued at little more than £9m, the likelihood is that a giant such as Gate Gourmet or DHL will take Journey out. With the balance sheet in rude health, we rate the shares as a buy.