A 3 per cent increase in passenger numbers didn't stop Ryanair (RYA) reporting its first drop in annual profits for five years for the period to 31 March. An industry-wide price war, currency headwinds and higher fuel prices hit the budget airline's bottom line, yet chief executive Michael O’Leary is adamant that ongoing improvements to customer service will help profits recover.
Relaxed bag restrictions, allocated seating and easier booking conditions seem to have upped the appeal of the low-cost carrier. But prices nonetheless slipped 4 per cent over the year. Management expects passenger numbers to grow marginally faster this financial year, but warns that capacity growth next winter - it expects to ground only 50 aircraft, down from 70 - could again weigh on ticket prices.
Mr O’Leary nonetheless believes post-tax profits will recover to between €580m-€620m, although he warned there was "zero visibility" over winter trading. Ryanair will still hand back more than €500m to shareholders in the form of a special dividend, bringing the total returned to shareholders since 2008 to €2.5bn. The carrier is also on track to deliver on a promise made last June to return €1bn to shareholders within two years.
Brokerage Panmure Gordon expects pre-tax profits of €773m for the coming year, giving EPS of 47.8ȼ.
RYANAIR (RYA) | ||||
|---|---|---|---|---|
| ORD PRICE: | 695ȼ | MARKET VALUE: | €9.61bn | |
| TOUCH: | 695-697ȼ | 12-MONTH HIGH: | 783ȼ | LOW: 523ȼ |
| DIVIDEND YIELD: | NIL | PE RATIO: | 19 | |
| NET ASSET VALUE: | 238ȼ | NET CASH: | €158m | |
| Year to 31 Mar | Turnover (€bn) | Pre-tax profit (€m) | Earnings per share (ȼ) | Dividend per share (ȼ) |
|---|---|---|---|---|
| 2010 | 2.99 | 341 | 20.7 | nil |
| 2011 | 3.63 | 421 | 25.2 | nil |
| 2012 | 4.39 | 633 | 38.0 | nil |
| 2013 | 4.88 | 651 | 39.5 | nil |
| 2014 | 5.04 | 591 | 37.0 | nil* |
| % change | +3 | -9 | -6 | - |
*Does not include special dividend £1 = €1.23 | ||||
