Budget airline Ryanair posted a slightly bigger rise in second-quarter net profit than expected yesterday but remained cautious in its outlook for the traditionally quieter winter season, knocking its shares.
Profit after tax in the three months to the end of September rose 16.5 per cent to €172.5 million from €148.1 million in the same period last year, beating the median forecast of €167 million compiled by Reuters Estimates.
But the company stuck to its forecast of a 10 per cent increase in full-year adjusted net profit to €295 million.
"We continue to remain cautious in our outlook for the remainder of the fiscal year," Ryanair Chief Executive Michael O'Leary said in a statement.
Shares in Ryanair fell four per cent to €6.72 in Dublin by 8.28 a.m. British time, underperforming a flat Irish market.
John Sheehan, analyst at NCB Stockbrokers, said the company had put in a strong performance in the first half of the year, demonstrating the success of its business model, but that it had taken a "pretty cautious outlook" for the rest of the year.
"Maybe some people were expecting some upgrades but I think the company is just acknowledging the difficult environment going into the winter."
Ryanair repeated it expected to achieve significant increases in passenger volumes but that yields - the money it receives per seat - were set to be flat in the third quarter and five to 10 per cent lower in the fourth quarter.
"This winter we expect that there will be continued intense competition and there will be fewer low fare carriers in the market as higher fuel prices force more carriers out of the industry," Mr O'Leary said.
Revenue for the second quarter rose 32 per cent to €541.5 million versus an expected figure of €542 million as Ryanair continued to expand its fleet and destinations network.
Ryanair Chief Financial Officer Howard Millar told Reuters in a telephone interview the company was set to beat its target of carrying 35 million passengers in the year to end-March.
"We would appear to be well booked now at this stage for the third quarter and we're happy with our numbers," he said. "We still believe we're going to exceed our 35 million passengers which we said we'd do earlier this year."
Mr Millar said deliveries of new planes from Boeing had been delayed by one month following industrial action at the US manufacturer.
Asked if there was any sign of weak European consumer sentiment slowing Ryanair's pace of growth, Mr Millar said: "So far, a bit like some of the other UK retailers like Tesco, we really haven't seen any sign of it."
As for ancillary revenues from sales of in-flight extras and other services, Ryanair's finance boss said he expected growth to continue to outstrip passenger growth this year and next after a rise of 36 per cent in the second quarter.
Most of the growth was coming from car rental, hotel bookings and travel insurance, the last of which he described as "growing very, very quickly".
Having hedged 90 per cent of its fuel costs until March 2006, the company said it had yet to take out any further insurance against high oil prices but that it was monitoring the market closely with a view to hedging its requirements for summer 2006.
"If we certainly saw $50 per barrel which is our current level of hedge - we're currently in at $49 - we'd certainly be very interested in hedging," Mr Millar said.