Ryanair Profits Plummet 29%

LONDON -- Ryanair (LSE: RYA.L  ) opened 4% down this morning on news of a 29% slide in profits to 99 million euros, down 40 million euros from 139 million euros in 2011, despite 11% growth in revenue, up to 1,284 million euros, and a 6% growth in traffic, with passenger numbers up to 22.5 million. The fall in profits is attributed to a 27% increase in fuel costs, which account for almost 50% of total operating costs.

Ryanair CEO Michael O'Leary commented:

Q1 yield increases were dampened by the EU wide recession, austerity measures, and heavily discounted fares at our new base launches in Cyprus, Denmark, Hungary, Poland, Provincial UK and Spain. Excluding fuel, Q1 unit costs rose by 3%, as we rigorously controlled costs, despite a 2% rise in flight crew pay, higher charges at certain airports, and the impact on costs of stronger Sterling against the Euro.

Despite this challenging environment Ryanair continues to grow its traffic across Europe while maintaining the lowest unit costs in the airline industry, and generating healthy profits as evidenced by the 8% after tax margin achieved in the first quarter.

Our outlook remains cautious for the year. We expect full year traffic to grow 4% (7% in H1, and 1% in H2 due to winter capacity cuts). We expect positive yields will continue in Q2 and anticipate smaller fuel cost increases (due to higher Q2 comparable last year and fuel saving measures we have implemented). Currently, we have no visibility of next winter's yields but expect that continuing austerity, EU recession, and lower yields at new bases will to restrain fare growth. Until we get some H2 yield visibility our guidance for FY 13 remains unchanged, in the range of 400m euros to 440m euros as previously guided.

Difficult economic conditions still ahead lie ahead for Ryanair, whose share price is more than 15% off its recent high of 4.52 euros in April. But one expert investor does have a record of success through good times and bad.

Indeed, ace stock picker Neil Woodford has delivered an impressive 347% total return -- and thrashed the wider market -- during the 15 years to Dec. 31, 2011.

What's more, you can discover the shares he now holds -- and which losers he's avoided -- within "8 Shares Held By Britain's Super Investor."

You can download this free Fool report about market legend Neil Woodford today. But hurry, the report is available for a limited time only.

Are you looking to profit from this uncertain economy? "Ten Steps To Making A Million In The Market" is the very latest Motley Fool guide to help Britain invest. Better. We urge you to read the report today -- it's free.

Further Motley Fool investment opportunities:

Jon doesn't own shares in Ryanair. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

DocumentId: 1963436, ~/Articles/ArticleHandler.aspx, 7/30/2014 5:39:58 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement