1st Quarter Results
Ryanair Holdings PLC
03 August 2004
RYANAIR ANNOUNCES Q1 PROFIT INCREASE OF 21%
NET MARGIN OF 18%, AS TRAFFIC GROWS 28%
Ryanair, Europe's No. 1 low fares airline, today (Tuesday, 3rd August 2004)
announced record profits for Q1 ended 30 June 2004 of €53.1m. Passenger volumes
grew by a record 28% to 6.6m passengers whilst yields declined by 6% during the
quarter and, as a result, total revenues rose by 23% to €302.8m. Unit costs fell
by 4% and in turn the net margin after tax remains stable at an industry leading
18%.
Summary Table of Results (Irish GAAP) - in Euro
Year Ended: 30 June 2003 30 June 2004 % Increase
Passengers 5.1m 6.6m 28%
Revenue €245.2m €302.8m 23%
Profit after
tax (Note 1) €43.8m €53.1m 21%
Basic EPS
(Euro Cents)
(Note 1) 5.8 7.0 21%
Note 1: Adjusted profit after tax and EPS excludes the non-recurring costs of
the re-organisation of 'Buzz' in April 2003 of €2.7m (net of tax) and goodwill
charges arising of €0.6m in both the quarters ended 30 June 2003 and 2004.
Announcing these results, Ryanair's Chief Executive, Michael O'Leary said:
'These record quarterly results reflect the continued disciplined roll
out of Ryanair's low fares model. Passenger volumes grew by 28% to 6.6m
in the quarter and we carried more passengers in 3 months than the total
traffic carried by Aer Lingus in a full year. Our two new bases at Rome
Ciampino and Barcelona Girona have performed particularly well.
Ryanair's strong performance is also reflected in the recent increases
in monthly traffic and load factors.
'Yields were 6% lower than last year, a decline that was towards the
lower end of our -5% to -10% guidance. Our forward yield guidance
remains unchanged. In Quarter 2 we anticipate a yield decline of between
-5% to -10%. Next winter, we expect the yield decline to be in the -10%
to - 20% range as chronically loss making competitors will continue to
dump prices, resulting in even more airline casualties this winter.
'The higher oil prices have continued through the summer and unlike many
high fare flag competitors, we have not imposed fuel surcharges. We
remain almost fully hedged until the end of Quarter 2 but largely
unhedged thereafter. We believe that over the medium term prices will
fall and therefore it would be unwise to lock-in at the current high
rates. We anticipate that we will be able to largely offset these higher
oil prices in this fiscal year by making cost savings in other areas.
'We have announced a major expansion of our London Luton base from 1 to
4 aircraft. In addition to our successful Dublin and Milan routes, we
will now fly from Luton to Barcelona Girona, Barcelona Reus, and Murcia
in Spain, Dinard and Nimes in France, Esjberg in Denmark, Rome Ciampino
and Venice in Italy, and Stockholm in Sweden. We have also announced two
new routes from London Stansted to Santander and Zaragossa in Spain and
continue to grow our base at Rome Ciampino launching new routes to
Santander in Spain, Paris-Beauvais and Eindhoven in Holland. We also
have launched our expansion into the new EU member countries and will
start 3 routes from Riga - the capital city of Latvia - to London,
Tampere and Frankfurt on 30 October next. Many more airports continue to
encourage Ryanair to launch new routes and as usual we have far more
offers than we can presently handle and this will drive down airport
costs.
'Unit costs fell by 4% during the quarter (excluding fuel and route
charges unit costs fell by 5.4%). We continue to benefit from the
ongoing introduction of the larger 737-800's as they replace the
remaining thirteen 737-200's. The remaining 737-200's will be retired by
December 2005. We continue to focus on lowering our cost base and pass
on these lower costs in the form of even lower fares to our passengers.
'The legislation recently introduced by the Irish government to break up
Aer Rianta will enable (for the first time ever) all of the government
owned Irish airports to compete on a level playing field. We welcome
this much delayed legislation and encourage the Minister to quickly
introduce competition at Dublin airport by directing the construction of
a second and third competing terminals. This initiative will finally
introduce competition, will result in lower prices, deliver better
facilities, and bring millions more visitors to Ireland.
'We have recently filed proceedings in the High Court in London for the
recovery of overcharging on fuel levies by BAA plc, the monopoly
operator of London's three major airports. The BAA has been charging a
fuel levy since 1991, which was agreed at the time to recover the £12.5m
cost of the fuel hydrant system. Since that date, thanks to Ryanair's
enormous growth, BAA has recovered over £39m in fuel levies or more than
three times the original cost and yet this extortionate levy remains
unchanged. BAA have also issued Court proceedings arising out of the
fuel levy dispute and we look forward to the Court's ruling on the BAA
overcharging. Ryanair continues to oppose anti-consumer charges at these
monopoly airports. It is untenable for the BAA airport monopoly to
impose fuel levies in excess of 300% of cost on its low fare consumers,
whilst at the same time providing free of charge car parking to
politicians. This anti-consumer rip-off must end.
'We continue to be cautious in our outlook for the remainder of the
year. We expect to achieve passenger volume growth this fiscal year in
the order of 20% and deliver increased load factors. We believe that
yield attrition this winter will be within our forecast range of -10% to
-20%. The reality is that the high cost, high fare airlines, and those
so called low fare loss makers are unable to compete with Ryanair's low
fares, low cost base and industry leading customer service. As Southwest
has repeatedly demonstrated in the US for many years, the lowest cost
carrier always wins.'
ENDS. Tuesday, 3rd August 2004
For further information please Howard Millar Pauline McAlester
contact: Ryanair Holdings plc Murray Consultants
www.ryanair.com Tel: 353 1 8121212 Tel: 353 1 4980300
Certain of the information included in this release is forward looking and is
subject to important risks and uncertainties that could cause actual results to
differ materially. It is not reasonably possible to itemise all of the many
factors and specific events that could affect the outlook and results of an
airline operating in the European economy. Among the factors that are subject to
change and could significantly impact Ryanair's expected results are the airline
pricing environment, fuel costs, competition from new and existing carriers,
market prices for replacement aircraft, costs associated with environmental,
safety and security measures, actions of the Irish, UK, European Union ('EU')
and other governments and their respective regulatory agencies, fluctuations in
currency exchange rate and interest rates, airport access and charges, labour
relations, the economic environment of the airline industry, the general
economic environment in Ireland, the UK and Continental Europe, the general
willingness of passengers to travel and other economics, social and political
factors.
Ryanair is Europe's largest low fare airline with 161 low fare routes
across 17 countries. Ryanair operates a fleet of 72 aircraft, and firm
orders for up to a further 102 new 737-800's which will be delivered
over the next 5 years. Ryanair currently employs a team of 2,600 people
and expect to carry approximately 27.5 million scheduled passengers in
the current year.
Ryanair Holdings plc and Subsidiaries
Consolidated Profit & Loss Accounts in accordance with UK & Irish GAAP
(unaudited)
Quarter Quarter
ended ended
June 30, June 30,
2004 2003
€'000 €'000
Operating Revenues
Scheduled revenues 259,059 214,031
Ancillary revenues 43,689 31,125
Total operating revenues-continuing operations 302,748 245,156
Operating expenses
Staff costs 34,075 29,902
Depreciation and
amortisation 23,571 23,037
Other operating expenses
Fuel & Oil 51,842 40,658
Maintenance, materials and repairs 4,073 11,184
Marketing and distribution costs 7,266 7,683
Aircraft rentals 8,084 1,506
Route charges 33,205 25,149
Airport and Handling charges 44,270 34,517
Other 21,574 18,446
Total operating expenses 237,960 192,082
Operating profit before non-recurring
items, and goodwill 64,788 53,074
Buzz re-organisation costs - (3,012)
Amortisation of goodwill (586) (584)
(586) (3,596)
Operating profit after non-recurring
items, and goodwill 64,202 49,478
Other income/(expenses)
Foreign exchange gains 115 193
Gain on disposal of fixed assets 6 -
Interest receivable and similar income 6,059 6,470
Interest payable and similar charges (12,630) (11,076)
Total other income/(expenses) (6,450) (4,413)
Profit before taxation 57,752 45,065
Tax on profit on ordinary activities (5,197) (4,545)
Profit for the period 52,555 40,520
Earnings per ordinary share
-Basic (Euro cent) 6.92 5.37
-Diluted (Euro cent) 6.90 5.30
Adjusted earnings per ordinary share*
-Basic (Euro cent) 7.00 5.80
-Diluted (Euro cent) 6.97 5.73
Number of ordinary shares (in 000's)
-Basic 759,280 755,204
-Diluted 762,162 764,469
*Calculated on Profit for the period before non-recurring items (net of tax),
and goodwill.
Ryanair Holdings plc and Subsidiaries
Consolidated Balance Sheets in accordance with UK and Irish GAAP (unaudited)
June 30, March 31,
2004 2004
€'000 €'000
Fixed assets
Intangible Assets 43,914 44,499
Tangible assets 1,612,800 1,576,526
Total fixed assets 1,656,714 1,621,025
Current assets
Cash and liquid resources 1,327,012 1,257,350
Accounts receivable 14,002 14,932
Other assets 19,269 19,251
Inventories 27,116 26,440
Total current assets 1,387,399 1,317,973
Total assets 3,044,113 2,938,998
Current liabilities
Accounts payable 79,341 67,936
Accrued expenses and other liabilities 392,122 338,208
Current maturities of long term debt 81,350 80,337
Short term borrowings 1,637 345
Total current liabilities 554,450 486,826
Other liabilities
Provisions for liabilities and charges 100,018 94,192
Other creditors 29,529 30,047
Long term debt 852,119 872,645
Total other liabilities 981,666 996,884
Shareholders' funds - equity
Called - up share capital 9,644 9,643
Share premium account 560,559 560,406
Profit and loss account 937,794 885,239
Shareholders' funds - equity 1,507,997 1,455,288
Total liabilities and shareholders' funds 3,044,113 2,938,998
Ryanair Holdings plc and Subsidiaries
Consolidated Cashflow Statements in accordance in accordance with UK & Irish
GAAP (unaudited)
Quarter Quarter
ended ended
June 30, June 30,
2004 2003
€'000 €'000
Net cash inflow from operating
activities 155,935 113,486
Returns on investments and servicing of finance (6,584) (3,842)
Taxation - -
Capital expenditure (including aircraft deposits) (60,457) (128,145)
Acquisitions (1,164) (20,704)
Net cash inflow/(outflow) before financing and
management of liquid resources 87,730 (39,205)
Financing (19,360) 56,250
(Increase) in liquid resources (69,984) (66,371)
(Decrease) in cash (1,614) (49,326)
Analysis of movement in liquid resources
At beginning of year 1,231,572 982,352
Increase in period 69,984 66,371
At end of period 1,301,556 1,048,723
Analysis of movement in cash
At beginning of year 25,433 76,550
Net cash (outflow) during period (1,614) (49,326)
At end of period 23,819 27,224
Ryanair Holdings plc and Subsidiaries
Consolidated Statement of Changes in Shareholders' Funds - Equity in accordance
with UK and Irish GAAP (unaudited)
Share Profit
Ordinary premium and loss
shares account account Total
€'000 €'000 €'000 €'000
Balance at April 1, 2004 9,643 560,406 885,239 1,455,288
Issue of ordinary equity shares 1 153 - 154
Profit for the period - - 52,555 52,555
Balance at June 30, 2004 9,644 560,559 937,794 1,507,997
Reconciliation of adjusted earnings per share (unaudited)
Quarter Quarter
ended ended
June 30, June 30,
2004 2003
€'000 €'000
Profit for the period under
UK and Irish GAAP 52,555 40,520
Adjustments
Buzz re-organisation costs - 3,012
Amortisation of goodwill 586 584
Taxation adjustment for above - (305)
Adjusted profit under UK and
Irish GAAP 53,141 43,811
Number of ordinary shares
(in 000's)
- Basic 759,280 755,204
- Diluted 762,162 764,469
Adjusted earnings per
ordinary share
- Basic (€ cent) 7.00 5.80
- Diluted (€ cent) 6.97 5.73
Ryanair Holdings plc and Subsidiaries
Consolidated Profit & Loss Accounts in accordance with US GAAP
(unaudited)
Quarter Quarter
ended ended
June 30, June 30,
2004 2003
€'000 €'000
Operating Revenues
Scheduled revenues 259,059 214,031
Ancillary revenues 43,689 31,125
Total operating
revenues -
continuing
operations 302,748 245,156
Operating expenses
Staff costs 34,035 29,682
Depreciation and
amortisation 23,571 23,037
Other operating expenses
Fuel & Oil 51,842 40,658
Maintenance, materials and repairs 14,073 11,184
Marketing and distribution costs 7,266 7,683
Aircraft rentals 8,084 1,506
Route charges 33,205 25,149
Airport and handling charges 44,270 34,517
Other 21,552 18,424
Total operating expenses 237,898 191,840
Operating profit before non-recurring items 64,850 53,316
Buzz re-organisation costs - (3,012)
Operating profit after non-recurring items 64,850 50,304
Other income/(expenses)
Foreign exchange gains 115 193
Gain on disposal of fixed assets 6 -
Interest receivable and similar income 6,059 6,470
Interest payable and similar charges (10,730) (9,253)
Total other income/(expenses) (4,550) (2,590)
Profit on ordinary activities before
taxation 60,300 47,714
Tax on profit on ordinary activities (5,439) (4,800)
Net income 54,861 42,914
Net income per ADS
- Basic (Euro cent) 36.13 28.41
- Diluted (Euro cent) 35.99 28.07
Adjusted net income per ADS *
- Basic (Euro cent) 36.13 30.20
- Diluted (Euro cent) 35.99 29.84
Weighted Average number of shares
- Basic 759,280 755,204
- Diluted 762,162 764,469
* Calculated on Net Income before non-recurring items (net of tax).
Ryanair Holdings plc and Subsidiaries
Summary of significant differences between UK, Irish & US generally accepted
accounting principles (unaudited)
(A) Net income under US GAAP
<----Quarter ended---->
June 30, June 30,
2004 2003
€'000 €'000
Profit as reported in the consolidated profit and
loss accounts in accordance with UK
and Irish GAAP 52,555 40,520
Adjustments
Pension 40 220
Amortisation of goodwill 586 584
Capitalised interest regarding
aircraft acquisition programme 1,900 1,823
Darley Investments Limited 22 22
Taxation- effect of above adjustments (242) (255)
Net income under US GAAP 54,861 42,914
(B) Consolidated Cashflow Statements in accordance with US GAAP
<----Quarter ended---->
June 30, June 30,
2004 2003
€'000 €'000
Cashflow from operating activities 149,351 109,644
Cash inflow/(outflow) from investing
activities 93,697 (23,999)
Cash (outflow)/inflow from financial
activities (18,068) 56,465
Increase in cash and cash equivalents 224,980 142,110
Cash and cash equivalents at beginning
of year 744,605 658,366
Cash and cash equivalents at end of
period 969,585 800,476
Cash and cash equivalents under US
GAAP 969,585 800,476
Restricted cash 200,000 120,890
Deposits with a maturity of between
three and six months 157,427 156,112
Cash and liquid resources under UK and
Irish GAAP 1,327,012 1,077,478
Ryanair Holdings plc and Subsidiaries
Summary of significant differences between UK, Irish & US generally accepted
accounting principles(unaudited)
(C) Shareholders' funds - equity
June 30, June 30,
2004 2003
€'000 €'000
Shareholders' equity as reported in the
consolidated balance sheets (UK and
Irish GAAP) 1,507,997 1,285,116
Adjustments:
Pension 3,240 3,331
Amortisation of goodwill 2,928 584
Capitalised interest regarding
aircraft acquisition programme 19,402 12,112
Darley Investments Limited (129) (217)
Minimum pension liability (net of tax) (2,631) (2,656)
Unrealised losses on derivative
financial instruments (net of tax) (91,730) (95,505)
Tax effect of adjustments (excluding
pension & derivative adjustments) (2,830) (1,930)
Shareholders' equity as adjusted to
accord with US GAAP 1,436.247 1,200,835
Opening shareholders' equity under US
GAAP 1,356,281 1,177,187
Comprehensive Income
Unrealised gains/(losses) on
derivative financial instruments (net
of tax) 24,951 (22,134)
Net income in accordance with US GAAP 54,861 42,914
Total Comprehensive Income 79,812 20,780
Stock issued for cash 154 2,868
Closing shareholders' equity under US
GAAP 1,436,247 1,200,835
Ryanair Holdings plc
Management Discussion and Analysis of Results
Introduction
For the purposes of the MD&A all figures and comments are by reference to the
adjusted profit and loss account excluding the non-recurring costs and goodwill
referred to below.
Non-recurring costs consisted of Buzz re-organisation costs of €2.7m (net of
tax), and goodwill of €0.6m amounting to €3.3m (net of tax) in the quarter ended
June 30, 2003 compared to €0.6m of goodwill in the quarter ended June 30, 2004.
Profit after tax increased by 30% to €52.6m during the quarter compared to last
year. The adjusted profit for the quarter, excluding non-recurring costs and
goodwill, increased by 21% to €53.1m.
Summary Quarter Ended June 30, 2004
Profit after tax increased by 21% to €53.1m, compared to €43.8m in the previous
quarter ended June 30, 2003. These results were achieved by strong growth in
passenger volumes and continued tight cost control. Total operating revenues
increased by 23% to €302.8m, which is slower than the growth in passenger
volumes of 28%, and reflects the competitive fare environment, and the company's
objective of continuing to drive down average fares. The combination of lower
fares and the successful launch of new routes and the slower rate of growth
resulted in the Passenger Load Factor increasing from 78% to 83% during the
period.
Total operating expenses increased by 24% to €238.0m, due to the increased level
of activity, and the increased costs, primarily fuel, maintenance, route charges
and airport & handling costs associated with the growth of the airline.
Operating margins have remained stable due to the continuing tight control on
costs, which in turn resulted in Operating profit increasing by 22% from €53.1m
to €64.8m. Profit after tax has increased by 21%, slightly less than the growth
in Operating profit and reflects the higher net interest charge in the period
arising due to the increased level of debt and lower deposit interest earned.
Net Margins have remained at 18% for the quarter.
Earnings per share have risen in line with profit growth by 21% to 7.0 cent for
the quarter.
Balance Sheet
The strong profit growth continues to positively impact the balance sheet with
Cash and Liquid Resources growing despite funding an additional €60.5m in
capital expenditure from internal resources. Cash balances at June 30, 2004 were
€1,327.0m, an increase of €69.7m from March 31st 2004. No additional debt was
drawn down in the quarter whilst loan repayments resulted in debt levels
declining by €19.5m to €933.5m. Shareholders' Funds at June 30, 2004 have
increased to €1,508.0m, compared to €1,455.3m at March 31, 2004.
Detailed Discussion and Analysis Quarter Ended June 30, 2004
Profit after tax, increased by 21% to €53.1m driven by strong growth in
passenger volumes and continued tight cost control. Operating margins have
remained stable at 21%, which has resulted in Operating profit increasing by
€11.7m to €64.8m compared to quarter ended June 30, 2003.
Total operating revenues increased by 23% to €302.84m whilst passenger volumes
increased by 28% to 6.6m.
Scheduled passenger revenues increased by 21% to €259.1m due to a combination of
increased passenger numbers on existing routes, the successful launch of new
bases at Rome-Ciampino and Barcelona-Girona, and the commencement of 7 new
routes in April '04, primarily offset by a 6% reduction in average fares. The
strong growth in passenger volumes is also reflected in the improvement in the
load factor achieved, which rose from 78% to 83% in the quarter.
Ancillary revenues increased by 40% to €43.7m, reflecting strong growth in
non-flight scheduled revenues, car rentals and other ancillary products.
Ancillary revenues continue to grow at a faster rate than passenger volumes and
accounted for 14% of total revenues during the period compared to 13% last year.
Total operating expenses increased by 24% to €238.0m due to the increased level
of activity, and the increased costs primarily maintenance, fuel, aircraft
rentals, route charges and airport and handling costs associated with the growth
of the airline. Increases in total operating expenses due to the higher level of
activity were partly offset by the positive impact of the strength of the euro
exchange against the US$.
Staff costs have increased by 14% to €34.1m. This increase primarily reflects a
12% increase in average employee numbers to 2,444 and the impact of pay
increases of 3% granted during the period.
Depreciation and amortisation increased by 2% to €23.6m. There are an additional
five 'owned' 737-800 aircraft in the fleet in Quarter 1 this year compared to
last year, however during the same period the company has retired six 737-200
aircraft. At the end of June the company operated 56 owned aircraft compared to
57 at the same time last year. The total operated fleet increased by 15 to 72
due to the purchase of five and the lease of ten 737-800's.
Fuel costs rose by 28% to €51.8m due to a 26% increase in the number of hours
flown, an increase in the average US$ cost per gallon of fuel offset by the
positive impact of the strengthening of the Euro to the US dollar during the
period.
Maintenance costs increased by 26% to €14.1m reflecting an increase in the size
of the fleet operated, and an increase in the number of hours flown offset by
maintenance savings due to improved reliability arising from the higher
proportion of 737-800 operated. In addition the introduction of ten aircraft
under operating lease has resulted in accruals for future overhaul costs being
recognised in maintenance costs. If the aircraft were owned, such costs would
instead be capitalised and amortised.
Marketing and distribution costs decreased by 5% to €7.3m due to the smaller
number of new routes launched in the period compared to last year. In addition
the advertising spend last year was significantly higher than normal due to the
acquisition of Buzz and the re-launch of its route network in May 2003.
Aircraft rental costs increased by €6.6m to €8.1m reflecting a full quarter of
costs associated with the acquired 'Buzz' aircraft and the lease of ten 737-800
aircraft which were delivered in the quarter to March 31, 2004.
Route charges increased by 32% to €33.2m due to an increase in the number
sectors flown, an increase in the average sector length and an increase in the
weight of the aircraft operated (which incur a higher charge), and the negative
impact of the strengthening of sterling against the Euro.
Airport and handling charges increased in line with passenger volume growth of
28% to €44.3m. The positive impact of lower charges on our new European routes
and bases was offset by the movement in the sterling/euro exchange rate in the
period.
Other expenses increased by 17% to €21.6m, which is less than the growth in
ancillary revenues due to improved margins on some new and existing products,
and cost reductions achieved on indirect costs.
Operating margins have remained very strong, in excess of 21%, due to the
reasons outlined above which has resulted in Operating profits increasing by 22%
to €64.8m during the quarter.
Interest receivable declined despite an increase in the level of cash and liquid
resources and highlights the lower deposit interest rates earned in the quarter
compared to last year. Interest payable increased by €1.6m due to the drawdown
of debt to part fund the purchase of new aircraft.
The Company's Balance Sheet continues to strengthen due to the strong growth in
profits during the period. The Company generated cash from operating activities
of €155.9m, which funded additional capital expenditure of €60.5m, primarily
comprised of advance payments for future aircraft deliveries. Long term Debt
declined in the last quarter due to the repayment of €19.4m. No additional debt
was drawn down in the period. Cash and liquid resources continued to reflect the
strong trading performance of the company during the quarter and at June 30,
2004 stood at €1,327.0m compared to €1,257.4 at March 31, 2004.
Shareholders' Funds at June 30, 2004 have increased to €1,508.0m compared to
€1,455.3m at March 31, 2004.
Notes to the Financial Statements
1. Accounting Policies
The accounting policies followed in the preparation of these consolidated
financial statements for the quarter ended June 30, 2004 are consistent
with those set out in the financial statements for the year ended March
31, 2004.
2. Approval of the Financial Statements
The Audit Committee approved the consolidated financial statements for the
Quarter ended June 30, 2004 on July 30th, 2004.
3. Generally Accepted Accounting Policies
The Management Discussion and Analysis of Results for the Quarter ended
June 30, 2004 are based on the results reported under Irish and UK GAAP.
This information is provided by RNS
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