Ryanair reports €569m full year profits

Dublin: Ryanair posted forecast-beating full-year earnings on Monday, buoyed by strong growth in fares and a sharp rise in charges for items such as baggage and in-flight refreshments.

Shares in Europe’s largest budget airline jumped more than 6 per cent to a record high of €6.764.

The company warned profit growth may slow sharply in the coming 12 months as it waits for new plane deliveries and margins are squeezed by higher fuel costs and cash-strapped consumers.

Yet its cautious outlook was offset by a strong performance in the past year, buoyed by a 6 per cent increase in average fares as capacity growth in Europe stalled, while non-ticket income from extras such as baggage and reserved seating, which account for around one-fifth of revenue, was up by 20 per cent.

Net profit reached €569 million ($730 million) in the 12 months to the end of March, up 13 per cent and ahead of an average analyst forecast of €558 million in a company poll.

Ryanair Chief Financial Officer Howard Millar said the company was making a cautious forecast for the current year due to poor visibility on bookings in the second half of the year.

“We are extraordinarily modest at the start of the year,” he said. The group warned that profit growth could stall in the year ahead, seeing profit at between €570 million and €600 million, an increase of between zero and 5 per cent.

A year ago Ryanair had forecast profit of between €400 million and €440 million for the year to March 2013.

“It’s not unusual that the guidance is quite cautious, but they are still forecasting higher profits,” said Davy stockbrokers analyst Stephen Furlong. “Their cash generation remains spectacular.”

The company had net cash of €61 million at year end despite having returned almost €500 million to shareholders in November.

Passenger growth

Ryanair also said it expected to see passenger growth slow to 3 per cent from 5 per cent last year, as it waits for deliveries to begin on 175 Boeing jets it ordered in March.

Most of that increase will come from a 5 per cent hike in capacity in the traditionally weaker winter period, when pressure on yields is more intense.

“With almost zero yield visibility into (the second half) and the EU-wide recession, we expect that there will continue to be downward pressure on yields which will dampen full-year profit growth,” Chief Executive Michael O’Leary said in a statement.

In the year as a whole, revenue per passenger mile will grow modestly as prices for oil and air traffic control charges eat into the forecast 3 per cent growth in capacity, O’Leary said.

Net profit in the first quarter to the end of June will be lower as the busy Easter period fell in the fourth quarter, O’Leary added.

Bookings on new routes and bases in the coming summer were ahead of expectations, but the company warned that average fares would be modest.

“They are playing down the yield environment, saying the first quarter softer than last year, but I’d be quite confident of a very good outrun in their peak summer trading period,” said Donal O’Neill, an analyst with Goodbody Stockbrokers in Dublin.

Ryanair’s largest low-cost rival easyJet last week said it expected 4 per cent growth in revenue per seat in the next six months and improved profitability for the full-year.

Ryanair shares are up 50 per cent since the start of the year, compared with a rise of some 55 per cent at rival easyJet and 18 percent in the Irish stock market as a whole.