Ryanair shares jump as it forecasts record profit and proposes first dividend

By Jamie Chisholm

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 EUR2.18 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 EUR1.85 billion and EUR2.05 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 EUR400 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 (IE: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 EUR21.

Other budget European airline shares benefitted from Ryanair's news, with easyJet (UK:EZJ) up more than 4% and Wizz Air (HU: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 (XE: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 EUR500 and EUR550 million, below market expectations of currently EUR571 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.

-Jamie Chisholm

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

11-06-23 0837ET

Copyright (c) 2023 Dow Jones & Company, Inc.