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Ryanair soars as profits beat expectations

Published: 20:38 19 May 2014 AEST

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Ryanair (LON:RYA) shares advanced 7% as the budget airline as it reported 2013 profits of €523mln, which was better than predicted.

The company itself had forecast profits in the range of €500mln to €520mln, whilst analysts had predicted profits in the order of €515mln.

Year-on-year, however, profits were down 8%, because of cheaper fares and higher fuel costs.

Ryanair handled 81.7mln passengers during the twelve months to March 31 2014, up 3% on the prior year, and had €5bn of revenue, also 3% better.

Perhaps unsurprisingly, to anyone that’s taken a Ryanair flight, the budget airline that once famously proposed to charge passengers to ‘spend a penny’ revealed that ancillary revenues are growing much faster than its passenger numbers.

Income from selling thing such as extra luggage, car hire, insurance, hotel bookings and in-flight ‘scratch-cards’ now accounts for a quarter of Ryanair’s total revenues.

Meanwhile, the company says a ‘hedge’ on 90% of its anticipated fuel requirements for the current financial, will save an estimated €70mln. It is also hedging a portion of its fuel requirements for 2016 already, as well as hedging for anticipated forex impacts.

In the current financial year Ryanair expects traffic to grow by 4%, to over 84.6mln passengers, with what it describes as ‘limited’ new routes and capacity growth.

It says bookings thus far for the busier summer period are “significantly ahead” of last year.

And whilst being cautious about forecasting in a weaker second half of the year, Ryanair said it expects to grow profits to between €580mln and €620mln in the current financial year.

City broker Cantor Fitzgerald described the results as “solid” as it repeated a ‘buy’ recommendation and an €8.30 price target.

Trading on the London Stock Exchange saw Ryanair shares almost 50 cents, 7.7%, higher at €6.84.

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