Davy Research |
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Ryanair Holdings
(RYA ID)
Very strong FY2012 results; conservative FY2013 guidance; 34c special dividend announced
21 May 2012
Stephen Furlong
| Closing Price: | 402c | Rating: | Outperform | 07/12/09 | Previous: | Neutral | 02/11/09 |
FACTS: FY results recorded €502.6m pre-exceptional net profit; FY 2013 guidance is for net income of €400-440m; special dividend of 34c proposed.
ANALYSIS: Ryanair delivered record net income and growth of 25% to €502.6m, resulting in an adjusted net margin of 12%. This compares with revised guidance of €480m, Davy estimates of €485.4m and consensus of €493.7m. The key components of the year were strong unit revenues offsetting the 30% increase in fuel costs. Scheduled revenues increased by 22% due to a 5% rise in passengers and a 16% increase in average fares (including c.15% in Q4). Ancillary revenues increased by 11%. Unit costs ex-fuel rose by 6% but remained flat on a sector length adjusted basis, once again illustrating the airline's industry- leading cost discipline
Ryanair's guidance range of €400-440m compares with Davy forecasts of €487.2m, which were right at the low end of the consensus range of c.€520m. As we indicated in our preview note, potential rises in Spanish airport passenger taxes together with no winter visibility would imply some caution in initial FY2013 guidance, notwithstanding the positive developments overall in the business model. Components of the guidance include 5% passenger growth (H1: 7%; H2: 3%) to 79m passengers and a fuel headwind of €320m (90% hedged at $1,011 per tonne). With the fuel bill skewed to H1, Q1 profits are expected to fall. We expect ex-fuel costs to be flat, implying yields up a more modest c.3%. We are likely to adjust down our forecasts to c.€425m but will make only minimal changes to FY2014 with fuel falling.
DAVY VIEW: The cash story and unique competitive position continue to be key. Another €0.34 per share payout (c.€483m) payable in November implies that Ryanair will have paid out €1.53bn in dividends and share buybacks to shareholders over the past five years. Net debt has fallen to €109.6m at end-FY2012 and, despite the special dividend, we would expect the company to be in net cash by FY2013 year-end. Of course, Ryanair continues to have flexibility to buy back c.5% of shares as well. With the continuing competitive weakness (capacity reductions, failures) combined with a falling oil price, incredible cost discipline and cash generation, we continue to see Ryanair as a relative outperformer and maintain our 'outperform' rating and €5 price target.
The company will host an analyst briefing at the Davy London office at Dashwood House, 69 Old Broad Street, London EC2M 1QS at 08.30 (UK/Ireland time) today (May 21st). This will be webcast at http://www.media-server.com/m/p/pj3m5fv5. There will be a conference call at 14.30 (UK/Ireland time) today at +44 20 7784 1036 (UK), +1 646 254 3363 (US) and +353 1 6590423 (Ireland).
For further detail, see our research note issued this morning.