Jet fuel cost a king’s ransom and Europe spent much of last year struggling to avoid recession. Yet Ryanair still made more money than ever through a combination of higher fares and extra charges. Unfortunately, the budget airline will not repeat the trick and warns net profit could be down as much as 20 per cent this year, suggesting a bumpy ride ahead.
Almost 76m passengers paid an average 16 per cent extra for their seat in the financial year to March, generating 19 per cent more underlying revenue and boosting net profit by a quarter at €503m (£406.06m). However, Ryanair spent almost €1.6bn on fuel and another €320m will be needed this year. Given that fare increases won’t cover the shortfall, the airline expects profits will drop to between €400m and €440m. Management's caution is understandable. Traffic may be tipped to grow again, but the carrier has “zero yield visibility” for next winter and fares remain low at its new base in Budapest and on extra routes from East Midlands and Barcelona. That said, rivals are failing at a rapid rate and help will come from slower capacity growth and further fare increases too. What’s more, enviable cash generation means shareholders are in line for a 34¢ a share special dividend in November.
Broker Liberum Capital expects a drop in adjusted EPS from 34.1¢ to 33.4¢ in 2013.
RYANAIR (RYA) | ||||
|---|---|---|---|---|
| ORD PRICE: | €3.94 | MARKET VALUE: | €5.68bn | |
| TOUCH: | €3.94-€3.95 | 12-MONTH HIGH: | €4.52 | LOW: €2.76 |
| DIVIDEND YIELD: | nil | PE RATIO: | 10 | |
| NET ASSET VALUE: | 230¢ | NET DEBT: | 3% | |
| Year to 31 Mar | Turnover (€m) | Pre-tax profit (€m) | Earnings per share (¢) | Dividend per share (¢)* |
|---|---|---|---|---|
| 2008 | 2.71 | 439 | 25.8 | nil |
| 2009 | 2.94 | -181 | -11.4 | nil |
| 2010 | 2.99 | 341 | 20.7 | nil |
| 2011 | 3.63 | 421 | 25.2 | nil |
| 2012 | 4.39 | 633 | 38.0 | nil |
| % change | +47 | +50 | +51 | - |
*Does not include special dividends £1=€1.24 | ||||
