Investors hunting for tangible effects of the referendum result beyond Marmite should look at budget airline Ryanair's (RYA) results. Chief executive Michael O'Leary said its planned 12 per cent expansion in the UK would now fall to 5 per cent. The weak pound has also led the group to trim full-year profit expectations to €1.30bn-€1.325bn (£1.17bn), a €75m cut. The UK represents 26 per cent of revenue, but that's likely to shrink as the group shifts its focus to Italy, where tourist taxes have been cut, and to Germany and Belgium, where competitors are feeling the pinch from deflationary fares.
The squeeze in air fares is a game Ryanair is only too happy to participate in. Average fares fell 10 per cent to €50 but crucially management was able to cut costs by 10 per cent too - if fuel costs are included. This is where the Irish carrier seems to be beating peers, evident by the fact it now operates in more primary airports (105) than secondary ones (95). The group said primary sites are incentivising the airlines to use them as incumbents struggle.
Analysts at Davy expect pre-tax profit of €1.48bn for the year to March 2017 leading to EPS of 105¢, compared with €1.72bn and 116¢ in FY2016.
| RYANAIR (RYA) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,340¢ | MARKET VALUE: | €16.81bn | |
| TOUCH: | 1,340-1,341¢ | 12-MONTH HIGH: | 1,559¢ | LOW: 1,053¢ |
| DIVIDEND YIELD: | NIL | PE RATIO: | 13 | |
| NET ASSET VALUE: | 372¢ | NET CASH: | €77m | |
| Half-year to 30 Sep | Turnover (€bn) | Pre-tax profit (€bn) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2015 | 4.04 | 1.56 | 103 | nil |
| 2016 | 4.13 | 1.31 | 92 | nil |
| % change | +2 | -16 | -11 | - |
Ex-div:na Payment:na £1=€1.12 | ||||
