Ryanair full-year profit up 43% but outlook cautious

Low-cost carrier Ryanair reported a jump in full-year profit but cautioned that profit growth for this year is likely to be modest.

For the year to the end of March 2016, net profit rose 43% to €1.24bn on revenue of €6.5bn, up from €5.7bn the year before.

Traffic was up 18% to 106.4m and unit costs fell 6%, or 2% ex-fuel.

Chief executive Michael O’Leary said: “FY16 was a year in which we delivered significant traffic and profit growth in all four quarters (despite an average oil price of $90bbl as a consequence of hedges put in place in 2014) as our AGB service programme is attracting millions of new customers to our lowest fare/lowest cost model.”

Ryanair said it expects average fares to decline by approximately 7% this year; fares are seen dropping by 5% to 7% in the first half and 10% to 12% in the second.

The Dublin-based group said it cautiously expects full-year net profit to rise modestly, by around 13% in the year to March 2017, to a range of €1.38bn to €1.43bn. This guidance remains heavily dependent on the strength of close-in summer bookings and next winter's yields, the strength of sterling and the absence of any further external shocks or significant ATC strikes/cancellations, the company said.

Ryanair said fourth-quarter yields on close-in Easter bookings took a hit from over 500 flight cancellations following the Brussels terrorist attacks and repeated – mainly French – ATC strikes.

In recent weeks Italian, Greek, Belgian and French ATC unions have also engaged in strikes, causing a further 200 plus cancellations, the company said.

It expects first-quarter yields to be affected by these cancellations, lower fares, the absence of Easter in April and sterling weakness in the run-up to the Brexit referendum on 23 June.

As far as Brexit is concerned, Ryanair said it strongly believes the UK economy and its future growth prospects are stronger if it remains a member of the European Union.

“If the UK leaves the EU then this, we believe, will damage economic growth and consumer confidence in the UK for the next two to three years as they begin to negotiate their exit from the EU and re-entry to the single market in very uncertain market conditions.”

Liberum said: “The results for the year to March were in line with consensus and our estimates. Compared with our forecasts, revenue was slightly light but costs marginally better than forecast.

“The sharp increase in profits reflected the acceleration of capacity growth, load factor improvements and cheaper fuel, despite a fuel hedge that was still relatively expensive.”

At 0821 BST, Ryanair shares were down 0.4% to €13.32.