Ryanair Holdings on Monday reported a sharp rise in first-quarter revenue, sending the budget airline back into profit, even as Easter bookings and fares were badly damaged by the Russian invasion of Ukraine in February.
For the three months to June 30, revenue was €2.60 billion, multiplied from €370 million in the first quarter last year. This helped swing the Dublin-based carrier to a profit after tax of €170 million from a €273 million loss a year before.
Average fares were down 4% on the same quarter pre-Covid, but ancillary revenue continued to perform strongly, delivering over €22.50 per passenger, Ryanair noted.
Looking ahead, Ryanair said it could not ‘ignore the risk’ of new Covid variants in Autumn. The carrier pointed to its experience with Omicron last November and the Ukraine invasion to demonstrate how ‘fragile the air travel market remains’. Ryanair said the strength of any recovery will be dependent on there being no adverse or unexpected developments over the remainder of financial 2023.
The airline said it is ‘clear signs of pent-up demand’. Average fares in the second quarter of its financial year are tracking ahead of pre-Covid levels by a low double-digit percentage, having been 4% down in the first quarter.
However, bookings remain closer-in than normal, leaving the company with ‘almost zero visibility into H2’.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: down 0.3% at 7,252.36
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Hang Seng: down 0.4% at 20,519.67
Nikkei 225: closed down 0.8% at 27,699.25
S&P/ASX 200: closed marginally lower, down 1.60 points at 6,789.90
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DJIA: closed down 137.61 points, or 0.4%, at 31,899.29
S&P 500: closed down 37.32 points, or 0.9%, at 3,961.63
Nasdaq Composite: closed down 225.50 points, or 1.9%, at 11,834.11
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EUR: down at $1.0198 ($1.0223)
GBP: down at $1.1970 ($1.2028)
USD: up at JP¥136.39 (JP¥136.11)
GOLD: down at $1,724.75 per ounce ($1,731.12)
OIL (Brent): down at $102.40 a barrel ($104.74)
(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
1000 CEST Germany Ifo business climate index
1100 BST UK CBI industrial trends survey
0830 EDT US Chicago Fed national activity index
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The number of UK restaurant insolvencies has increased sharply in the past year amid staff shortages and rising inflation, according to a new study. Accountancy firm UHY Hacker said the total jumped from 856 in 2020/21 to 1,406 in the past year. Peter Kubik, of UHY Hacker Young, said restaurants are facing spiralling inflation, decreased consumer spending and a labour shortage. Previous research by UHY Hacker Young found restaurants have already seen losses rise to more than £800 million in the past six months as they felt the effects of major restructuring programmes after the pandemic. Kubik said: ‘Pressure is rising on the restaurant sector every day. More and more of them are shutting their doors as a result.
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European countries not dependent on Russian gas need to show solidarity with those that are being forced into conservation efforts due to impending cut-offs of the fuel, argues European Commission President Ursula von der Leyen. ’Even member states that hardly purchase any Russian gas cannot escape the effects of a potential supply stop on our internal market,‘ von der Leyen told dpa ahead of a special meeting of the bloc’s energy ministers planned for Tuesday. The comments came in the wake of criticism voiced by both Spain and Portugal of a Commission-proposed gas emergency plan. The Portuguese government called the plan ’untenable‘ and said that its gas consumption was an ’absolute necessity‘. The EU Commission’s plan calls for all EU states to voluntarily reduce their gas consumption by at least 15% between August 1 and March 31, while also making it possible to order further reductions in consumption in the event of a serious gas crisis.
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Cities across China were on red alert for heatwaves on Monday, as tens of millions of people were warned to stay indoors and record temperatures strained energy supply. Swathes of the planet have been hit by extreme and deadly heatwaves in recent months, from Western Europe in July to India in March to April. Scientists say the extreme weather has become more frequent due to climate change, and will likely grow more intense as global temperatures continue to rise. China is no exception and is sweating through one of its hottest summers on record. In the eastern provinces of Zhejiang and Fujian, the mercury rose above 41 degrees Celsius over the weekend, reaching all-time highs in two cities.
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BROKER RATING CHANGES
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Jefferies starts Haleon with ’hold’ - price target 330 pence
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Bernstein places Tesco as ’Bernstein best idea’ for third quarter
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Berenberg raises Trainline price target to 460 (350) pence - ’buy’
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Citigroup starts GB Group with ’buy’ - price target 607 pence
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COMPANIES - FTSE 100
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Telecommunications firm Vodafone maintained annual guidance after a rise in first-quarter revenue. Vodafone said its first-quarter performance was in line with expectations, with continued growth seen in both Europe and Africa. For the three months to June 30, revenue was up 1.6% to €11.3 million from €11.1 million in the first quarter last year. Looking ahead, Vodafone said it was on track to deliver financial 2023 guidance, with adjusted earnings before interest, tax, depreciation and amortisation after leases expected to be between €15.0 billion and €15.5 billion and adjusted free cash flow of €5.3 billion. Vodafone said its Europe Consumer contract mobile average revenue per user grew by 0.7% year-on-year. It added 215,000 mobile contract customers, but lost 72,000 broadband customers in the quarter. Vodafone also said growth in Africa was supported by data revenue and financial services growth, as its M-Pesa customer base grew to almost 50 million in the quarter. ’We have executed in line with our expectations, delivered another quarter of growth in both Europe and Africa, and seen an acceleration in business growth. Whilst we are not immune to the current macroeconomic challenges, we’re on track to deliver financial results for the year in line with our guidance,‘ said Chief Executive Officer Nick Read.
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Airtel Africa said its Kenya subsidiary, Airtel Kenya Networks, has purchased 60 megahertz of additional spectrum in the 2600 MHz band from the Communications Authority of Kenya for $40 million. The licence is valid from this month and runs for a period of 15 years. Airtel Africa said the additional spectrum will support 4G network capacity expansion in the market for both mobile data and fixed wireless home broadband capability. It will allow for future 5G rollout, providing significant capacity to accommodate continued strong data growth in the country, it added.
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COMPANIES - FTSE 250
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Molten metal flow engineer Vesuvius said trading for the months of May and June remained stronger than anticipated, despite ongoing end-market weakness. As such, Vesuvius expects to report a trading profit for the first half of 2022 of £127.4 million. The company said its outperformance in the first half was due to the successful implementation of pricing strategy to recover input costs as well as market share gains, supported by ’technological differentiation‘. In addition, Vesuvius said there remains significant uncertainty as to the strength of its end markets. As a result, its expectations for trading in the second half of the year, including a material drop in volume compared to the first half and challenging cost inflation, remain broadly unchanged. Vesuvius now expects its full-year trading profit to be towards the top end of the range of current analysts’ expectations of £155 million and £199 million.
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Premier Foods said it has agreed to acquire Indian and South East Asian meal kit brand Spice Tailor for an initial £43.8 million on a cash free and debt free basis. Premier Foods said Spice Tailor is expected to generate revenue of £17.3 million in financial 2023. It has a strong geographical fit with Premier Foods’ existing footprint, with a presence in the UK, Australian, Canadian and Irish markets, the company noted.
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Monday’s shareholder meetings
BP Marsh & Partners PLC - AGM
Keras Resources PLC - AGM
Keras Resources PLC - GM re share consolidation
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