Ryanair shares fell nearly 10 per cent today after the company posted a 59 per cent increase in annual net profits to €239.4 million. But the company warned that the strengthening euro and weak European economy would depress yields in the year ahead.
Passenger traffic for the year grew by 42 per cent to 15.7 million as average load factors increased from 81 per cent to 84 per cent, primarily due to a 6 per cent reduction in average fares.
The reduction in yields, or earnings per seat, was a result of continuing price promotions and the launch of over 20 new routes including a new base in Milan-Bergamo, Ryanair said. After tax margins increased from 24 per cent to 28 per cent.
Announcing the results, Ryanair's chief executive, Mr Michael O'Leary describe t the results for the past 12 months as "exceptional" and unlikely to be repeated next year.
"We have repeatedly stated that profit margins of almost 30 per cent are a one off and non-sustainable," Mr O'Leary said.
He added that profit margins will also be diluted by the closure and relaunch of the Buzz operation which was grounded for April and the negative impact of operating Buzz's expensive BAe146 aircraft in the short term.
Referring to the decline in yields that have fallen 15 per cent during the month, of which 5 per cent is due to currency movements Mr O'Leary said "I personally expect no near-term improvement in either the low-fare environment or the strength of the euro, and believe therefore that yields for the year will continue to be 10 per cent to 15 per cent lower than last year".
However, he said the weaker sterling effect will be partially compensated by lower sterling costs. In addition the strength of the euro against the dollar will substantially lower costs of aircraft acquisitions, fuel and spares over the coming years.