27th Jul 2015 12:38
LONDON (Alliance News) - Ryanair Holdings PLC on Monday said its pretax profit in the first quarter of its financial year rose by 25% on the back of more passengers, higher revenue and better margins for the Irish budget carrier, prompting it to hike its pretax profit guidance for the full year, though shares in the company were off in London trade as consensus estimates were already pricing in profit at the top end of expectations.
Ryanair said its pretax profit for the three months to the end of June was up to EUR245 million, from EUR197 million a year earlier, on the back of a 10% rise in revenue to EUR1.65 billion from EUR1.50 billion. The group's net margin in the quarter improved to 15% from 13%.
On the back of the results, Ryanair said it has raised its full-year traffic target to 103 million passengers from 100 million previously and said its pretax profit for the full year will be towards the upper-end of its previously-guided range of EUR940 million to EUR970 million.
The group did add, however, that meeting this guidance will be heavily-dependent on its second-half fare levels, over which it has "almost zero visbility" right now. Liberum said the in-line results from Ryanair and its unchanged guidance may limit any upgrades to consensus estimates in the short-term, as most estimates were already predicting profit at the top end of company guidance.
The broker added there was further evidence of Ryanair's figures being flattered by cheaper fuel and higher load factors, with non-fuel unit costs rising by 4% on a per-seat basis in the quarter.
"We are pleased to report strong growth in traffic and profits in the first quarter. Our mix of low fares, best on time performance and enhanced customer experience under our 'Always Getting Better' programme, continues to attract millions of new customers," said Michael O'Leary, Ryanair's chief executive.
Ryanair said it carried 28 million customers in the quarter, up 16% from the 24.3 million it carried a year earlier. This number is expected to rise in during the course of the financial year, with the company set to increase it fleet size to 340 by the end of the year, with a further 31 to be added in the winter.
The group will open a new base in Germany in Berlin in September and expects to drive strong growth in the German market over the next five years. It will also open its second Swedish base, in Gothenburg, in the same month and, in November, will start operating its first flights to Israel.
In addition to the passenger volume estimate upgrade, Ryanair said it expects passenger volumes to grow by 13% in the first half and by 15% for the full year, driven by a strong load factor and better winter grounding levels.
The group added that it now expects average fares for the first half to be broadly flat year-on-year, from previous guidance of flat to a 2% decline, due to the strong first quarter performance and reasonable visibility going into the second quarter.
It added it has very little visibility on the second half of the year, during which it expects its capacity growth ramp up and lower oil price may lead to an aggressive pricing response from its competitors, meaning it is retaining a cautious stance on prices and yields for the winter.
By Sam Unsted; [email protected]; @SamUAtAlliance
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