Concerns about slowing growth and profit warnings at Ryanair (RYA) have kept easyJet's (EZJ) shares in a holding pattern since August. But investors need not worry. Full-year pre-tax profit climbed to a record high and reached the top end of City estimates. Management will reward shareholders with a special dividend worth 44.1p per share, too, increasing the yield to almost 6 per cent.
With legacy airlines still deserting unprofitable short-haul operations, easyJet increased capacity by 3.3 per cent and flew nearly 61 million passengers over the 12 months. Revenue per seat rose by 7 per cent to £62.58 and an expensive advertising campaign, and the introduction of allocated seating, helped drive profit per seat up 46 per cent to £7.03. That easily offset a 3.9 per cent increase in unit costs, excluding fuel; mostly reflecting higher airport charges and de-icing costs. But there is turbulence to negotiate. Repeating last year's post-Olympics boom won't be easy - Easter falling in the group's second half will cut revenue per seat by 150 basis points (bps), and travel restrictions to Egypt will slice off another 70bps. First-half revenue will rise only "very slightly" and industry capacity, which fell 4 per cent last winter, is expected to grow by 2 per cent this year.
Investec Securities expects pre-tax profit of £529.6m in 2014, giving adjusted EPS of 103p (from 100p in 2013).
EASYJET (EZJ) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,349p | MARKET VALUE: | £5.35bn | |
| TOUCH: | 1,348-1,350p | 12-MONTH HIGH: | 1,465p | LOW: 638p |
| DIVIDEND YIELD†: | 2.5% | PE RATIO: | 13 | |
| NET ASSET VALUE | 509p* | NET CASH: | £558m | |
| Year to 30 Sep | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p)† |
|---|---|---|---|---|
| 2009 | 2.67 | 54.7 | 16.9 | nil |
| 2010 | 2.97 | 154 | 28.4 | nil |
| 2011 | 3.45 | 248 | 52.5 | 10.5 |
| 2012 | 3.85 | 317 | 62.5 | 21.5 |
| 2013 | 4.26 | 478 | 101 | 33.5 |
| % change | +11 | +51 | +62 | +56 |
Ex-div: 26 Feb Payment: 21 Mar *Includes intangible assets of £467m, or 118p a share †Excludes special dividends of 34.9p in 2011 and 44.1p in 2013 | ||||
