Ryanair hits turbulence as profit warning rocks sentiment in markets
SHARES in Ryanair plummeted as much than 6pc before recovering yesterday after the airline shocked markets by forecasting a fall in profits of up to 20pc next year.
The airline blamed higher fuel costs and uncertainty about future passenger numbers for predicting earnings next year of between €400m and €440m -- well down on this year.
The profit warning for 2013 wrong-footed analysts, who had expected the company to increase profits next year by almost 10pc.
"We remain concerned about next winter as we have zero yield visibility, but expect recession, austerity, currency concerns and lower fares at new and growing bases in Hungary, Poland, provincial UK and Spain will make it difficult to repeat this year's results," said chief executive Michael O'Leary.
"Our fuel costs will increase by some €320m for full-year 2013, and most of that will be skewed into the first half of the year," added deputy chief executive Michael Cawley.
The warning overshadowed Ryanair's reporting of record profits for the year to the end of March 2012, with profits after tax surging more than 25pc to €503m.
The profit growth outpaced revenues, which climbed 19pc to €4.3bn. Those figures translated to earnings per share of 34.1 cents -- an increase of 26pc.
Despite the bleak outlook, investors were cheered by the airline's confirmation that it will propose a special dividend of 34c at the firm's annual general meeting.
The average fare jumped some 16pc to €45, the company said, while its planes carried 75.8 million passengers during the year, an increase of 5pc. The load factor, a measure of how full its planes are, was little changed at 82pc.
Mr Cawley rejected claims that the airline unfairly levies extra charges on passengers, saying all its extras are avoidable.
"Nobody paid the check-in charge at the weekend (when the website was down)," he claimed. "All had checked in online before the website came off line.
"All our charges can be avoided. People avoid the charges because they don't carry bags and they don't want to subsidise the people who bring a bag."
Ryanair will fly fewer passengers out of Dublin this year, largely as a result of the airline's decision to park up 80 of its 294 aircraft over the winter.
Analysts were positive on the results but were left scratching their heads at the low forecasts.
NCB Stockbrokers' airline analyst Brian Devine said a "good set of current figures" was offset by "what we believe is an extremely cautious guidance".
"We are not optimistic about the scenario in Europe, but we believe that Ryanair will be a relative winner in a recessionary environment," he added.
Bloxham Stockbrokers' Joe Gill was more relaxed on the weak outlook, saying it fitted Ryanair's pattern. "It's almost always the same at this point if you look at the last 10 years," he said.
"Visibility is non-existent and they have a fixed step-up in fuel costs so they have a fairly conservative view," he added.
In Dublin, shares in the company fell by as much as 6.6pc before a late trade of more than 600,000 shares boosted the stock to close at €4.04 for a gain of 0.4pc.