Low-cost airline Ryanair on Monday said a ‘fragile’ recovery for the travel industry was being threatened by higher fuel costs as a result of the Russian invasion of Ukraine, but it still expects to return to profit in the current year.
The Dublin-based carrier reported a narrowed net loss of €355 million in the financial year that ended March 31, cut from €1.02 billion the year before, as revenue multiplied to €4.80 billion from €1.64 billion.
‘This recovery, however, remains fragile’ following Russia’s invasion of Ukraine, Chief Executive Michael O’Leary said in a statement.
‘Given the continuing risk of adverse news flows on’ Ukraine and Covid, ‘it is impractical – if not impossible – to provide a sensible or accurate profit guidance range at this time,’ he added.
While Ryanair expects cost increases as a result of surging oil prices fuelled by the war, it hopes ‘to return to reasonable profitability’ in its current financial year.
It forecast passenger traffic of 165 million in its current year, compared with a pre-pandemic level of 149 million.
The airline carried more than 97 million passengers last year compared with 27.5 million during the previous 12 months period when the pandemic struck.
Ryanair shares were down 4.5% at €13.14 early Monday
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: down 0.7% at 7,367.51
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Hang Seng: down 0.1% at 19,883.41
Nikkei 225: closed up 0.5% at 26,547.05
S&P/ASX 200: closed up 0.3% at 7,093.00
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DJIA: closed up 466.36 points, or 1.5%, at 32,196.66
S&P 500: closed up 93.81 points, or 2.4%, at 4,023.89
Nasdaq Composite: closed up 434.04 points, or 3.8%, at 11,805.00
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EUR: soft at $1.0402 ($1.0410)
GBP: flat at $1.2233 ($1.2230)
USD: down at JP¥129.01 (JP¥129.28)
GOLD: down at $1,805.80 per ounce ($1,940.80)
OIL (Brent): down at $109.97 a barrel ($111.00)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Monday’s key economic events still to come
1100 CEST EU foreign trade
0830 EDT US Empire State manufacturing survey
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UK Prime Minister Boris Johnson will hold emergency talks with Northern Ireland’s political leaders later in a bid to break a Stormont deadlock caused by post-Brexit trading arrangements. The powersharing institutions have been plunged into crisis in the wake of the recent Assembly election with the DUP refusing to re-enter a devolved government in protest at the contentious Northern Ireland protocol, which has created economic barriers between the region and the rest of the UK. Johnson’s visit comes amid heightened tensions between the UK and EU over the prospect of him moving to override elements of the protocol by way of domestic legislation at Westminster. Brussels has made clear that such unilateral action to walk away from a key plank of the Brexit Withdrawal Agreement would represent a clear breach of international law. Ahead of his trip to Northern Ireland, Johnson said the UK will have a ‘necessity to act’ if the EU is unwilling to reach a compromise in the deepening row over the protocol.
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BROKER RATING CHANGES
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Goldman Sachs raises Phoenix Group to ’buy’ (neutral) - price target 857 (700) pence
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Goldman Sachs cuts Aviva to ’neutral’ (buy) - price target 500 (510) pence
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Berenberg cuts Kainos Group to ’hold’ (buy) - price target 1,200 (2,100) pence
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COMPANIES - FTSE 100
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Vodafone responded to the weekend announcement by Emirates Telecommunications that it had bought a 9.8% stake in the UK company. Vodafone said it was informed of the purchase by Emirates Telecom, which previously traded as Etisalat. ‘We look forward to building a long-term relationship with Etisalat,’ Vodafone said, adding it will provide an update on its strategic plans with its annual results on Tuesday.
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Home improvement business Screwfix will create 800 retail jobs by January as part of plans to open 80 new shops across the UK and Ireland. The retailer’s sales were boosted during the pandemic as locked-down Britons hired tradespeople to spruce up their properties and gardens. Screwfix and B&Q owner Kingfisher enjoyed profits of more than £1 billion last year, as the DIY boom seen through the pandemic continued. The chain will be recruiting sales assistants and management roles for its new stores as well as giving new recruits the chance to join its apprenticeship scheme, which currently trains 850 staff in areas including retail management and human resources.
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COMPANIES - FTSE 250
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High-street bakery chain Greggs said it has ‘traded well’ in the first 19 weeks of 2022. Like-for-like sales in company-managed shops surged 27%, a figure which the firm noted is ‘flattered’ by comparison with restricted trading conditions in the same period of 2021. ‘Since we last reported, like-for-like sales growth in the most recent ten weeks to 14 May, when lockdowns in 2021 were easing, has averaged 16% and we expect this figure to continue to normalise as we start to compare with more robust trading periods in 2021,’ Greggs added. Greggs noted that sales in cities and office locations ‘continue to lag’ but transport locations seen a ‘marked increase’. Total sales in the 19 weeks to May 14 increased to £495 million from £378 million.
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Diploma on Monday said it was ‘delighted’ with its performance in the first half, with sales surging. The London-based specialised technical products and services company said its revenue growth was driven by positive demand and pricing. In the six months to March 31, revenue was up 23% to £448.5 million from £365.2 million, and pretax profit up 23% to £52.3 million from £42.5 million. Diploma upped its interim dividend by 20% to 15.0 pence from 12.5p. ‘We are not complacent about the economic outlook, but the second half has started really well and we are confident in our upgraded full year guidance,’ Chief Executive Johnny Thomson said. Diploma is guiding for low double digit underlying revenue growth, and reported revenue growth of a ‘little over’ 20%.
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National Express confirmed it will not raise the offer for public transport peer Stagecoach that it made back in March. National Express said it believes its all-share combination with Stagecoach remains the better choice after being spurned for a cash offer from DWS Infrastructure. In a statement on Monday, National Express said: ‘The National Express board notes that the proposed exchange ratio represents a current value of 90p per Stagecoach share - based on the latest National Express share price as at May 13 2022 - and an illustrative look-through value of approximately 113p per Stagecoach share, a 7% premium to the DWS offer. ’National Express therefore considers the terms of its proposal to be full and fair and has decided that the terms will not be increased and are now final.‘ Stagecoach walked away from the all-share merger with larger UK peer National Express, opting instead for a £594.9 million cash offer from Pan-European Infrastructure III SCSp, an infrastructure fund managed and advised by DWS Infrastructure. On Monday, DWS noted it has secured 30.4% acceptances for its takeover, which is unchanged from recent updates.
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Online trading platform Plus500 said trading in the second quarter has been ’very strong‘. As a result, it expects annual earnings and revenue will be ’significantly ahead of current market expectations‘. In 2021, Plus500 posted pretax profit of $386.4 million on revenue of $718.7 million. ’The group’s strong performance so far in 2022 has also been driven by the development of new proprietary technologies and product offerings, which will deliver growth and drive expansion and diversification across new geographies,‘ Plus500 added.
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COMPANIES - SMALL CAP
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Made.com said it has hired the former chief financial officer of John Lewis Partnership as its own new CFO. Patrick Lewis will join the furniture retailer on June 27, replacing Adrian Evans, who will leave after being with Made.com since 2017. The announcement came, as Made.com provided a trading update, warning that ’trading has been volatile in recent months and more challenging than anticipated at the start of the year‘. It updated its 2022 guidance saying: ’We now assume the market will remain highly challenging for the rest of 2022 despite the significantly easier [comparatives] for H2.‘ The stock was down 20% early Monday.
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COMPANIES - GLOBAL
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Indian billionaire Gautam Adani struck a $10.5 billion deal to buy Swiss cement maker Holcim’s local business, the companies said, betting on a construction boom predicted in coming decades. In his biggest acquisition to date, the deal will give coal-to-ports magnate Adani – who vies with fellow Indian Mukesh Ambani for the title of Asia’s richest person – a controlling stake in India’s second-largest cement manufacturer. ’Our move into the cement business is yet another validation of our belief in our nation’s growth story,‘ Adani said in a statement late Sunday.
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After mounting pressure since the Russian invasion of Ukraine, Renault announced it has signed deals to cut ties with its Russian operations. The Paris-based carmaker has agreed to fully divest of its shares in Renault Russia to a Moscow City entity. It will also sell its 68% controlling interest in AvtoVAZ, the largest carmaker in Russia with the country’s top brand Lada, to NAMI which is Russia’s Central Research & Development Automobile & Engine Institute. The deals are not subject to any conditions, Renault said, with all necessary approvals having been received. The financial details of the sales were not provided. The agreement allows Renault to buy back its interest in AvtoVAZ, at certain points in the coming six years.
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Monday’s shareholder meetings
88 Energy Ltd - AGM
Allianz Technology Trust PLC - AGM
Blackbird PLC - AGM
BSF Enterprise PLC - GM
Crossword Cybersecurity PLC - AGM
DigitalBox PLC - AGM
Ethernity Networks Ltd - AGM
Jubilee Metals Group PLC - GM - re right of directors to allot equity securities for cash
Mast Energy Developments PLC - AGM
Metal Tiger PLC - AGM
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