Ryanair shares jumped more than 6% on Monday, after Europe’s biggest airline forecast a record annual profit and said it would pay a maiden dividend.
The Dublin-based group reported a net profit for the half year ended Sept. 30 of €2.18 billion ($2.34 billion), up 59% from the year before, as traffic grew 11% to 105.4 million passengers on a strong Easter period and record summer demand.
As more people travel following the COVID lockdowns, Ryanair had been able to increase average fares by 24% over the period.
The budget airline, which usually makes losses over the winter period, said it expects a full-year profit after tax of between €1.85 billion and €2.05 billion for its financial year ending in March, topping the previous record set in 2018.
Management’s confidence in the airline’s recovery was reflected in the announcement of plans to pay a regular dividend for the first time, beginning with a €400 million payout over the next year.
The airline could pay a dividend now that capital expenditure had built a dominant position in the European market, it said. Ryanair is the biggest European carrier in terms of passenger numbers.
Though Ryanair shares
RYA,
RYAAY,
were already up by nearly a quarter for 2023, Jaime Rowbotham, analyst at Deutsche Bank, said “we’d have thought today’s solid second quarter 2024 results, progressive full-year 2024 profit-after-tax guide and commitment to shareholder returns will be positively received,” and he rated the stock a buy with a price target of €21.
Other budget European airline shares benefitted from Ryanair’s news, with easyJet
EZJ,
up more than 4% and Wizz Air
WIZZ,
gaining nearly 3%.
In the broader market, the mood was more cautious after the sharp gains of the previous week — which saw the STOXX Europe 600 index
XX:SXXP
add 3.4% — with Frankfurt’s DAX
DX:DAX
down 0.3%, the CAC 40
FR:PX1
in Paris off 0.4% and London’s FTSE 100
UK:UKX
down 0.2%.
Shares in Germany-listed specialty chemicals group Lanxess
LXS,
fell more than 6% to hover just above 14-year lows after the specialty chemicals reduced earnings guidance and proposed a dividend reduction.
Destocking by customers in the agroindustry and problems with a supplier in the flavors and fragrances division means Lanxess now expects full year 2023 earnings before interest, tax, depreciation and amortization pre exceptionals to amount to between €500 and €550 million, below market expectations of currently €571 million.
Lanxess shares also fell sharply in the summer when it gave a profit warning after it said demand from China was not as great as hoped.
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