Ryanair raises forecast for passenger numbers amid heavy Q1 loss

Liam Roche
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Ryanair raises forecast for passenger numbers amid heavy Q1 loss

Ryanair posted a €273m loss for the quarter between April and June

Ryanair (LON:RYA) confirmed a sharp rise in bookings while the low budget airline raised its forecast for passenger numbers over the coming year as travel restrictions are being eased across the continent.

However, the Irish company posted a €273m loss for the quarter between April and June, as lockdowns meant the majority of flights were cancelled amid ongoing caution.

A year ago, Ryanair recorded a €185m loss during the same Q1 period.

Ryanair carried 8.1m passenger during Q1, up from 0.5m in the same period in 2020, when the pandemic was well and truly underway.

The airline was faced with soaring operating costs of €675m, while it managed to bring its revenue up to €370m.

The low budget airline said its mini-recovery was thanks to vaccinations, as well as the easing of isolation rules for travellers who have taken the vaccine, and the EU’s digital travel pass which the EU introduced at the beginning go July.

These factors have given Michael O’Leary, the chief executive of Ryanair, a degree of confidence over a sustained recovery for the industry, after the pandemic continued to test his company throughout the pandemic.

With a surge in bookings coming from continental Europe, Ryanair will increase its number of flights in operation during the end of summer.

While the airline is still facing challenging circumstances, it suggested that it will end the fiscal year “somewhere between a small loss and breakeven” as restrictions are there to stay for now.

Danni Hewson, financial analyst at AJ Bell, added:

“Could a last minute rush rescue Ryanair’s year? While the summer has been heavily affected by the continued strict restrictions on travel throughout Europe, the company is seeing notably higher bookings both for late summer holiday bookings and the winter,” Hewson said.

“This demonstrates how resilient demand for foreign holidays remains, particularly among the fully vaccinated cohort which now have a little more freedom to travel.”

“If people are booking now given all the uncertainty and hassle involved in flying then you could imagine a more rapid ascent when, hopefully, we finally emerge from the pandemic.”

The Ryanair share price is up by 3.56% during the morning session on Monday.

New AIM admission: Zenova’s fire retardant IP is not a flame proof investment

Andrew Hore
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New AIM admission: Zenova’s fire retardant IP is not a flame proof investment

Zenova Group has developed fire extinguisher fluids and fire retardant paints that can be applied to many types of surface. Increasing fire regulation will provide opportunities for Zenova.
The global fire resistant coatings market is estimated to be worth $933m and there is scope for the technology to be used in other coatings that are not currently fire retardant. The insulating paint market is current valued at around $9bn.The fire extinguisher market is expected to grow at 4.6% a year and reach $8.3bn in 2027. There is also potential for ceiling sprinklers.
The marketing focus is construct...

New standard listing: Sivota seeking Israeli technology deal

Andrew Hore
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New standard listing: Sivota seeking Israeli technology deal

Sivota is a shell that wants to acquire Israel-based technology businesses, although it will assess companies in other countries. The important person in the set-up is Ziv Ben-Barouch, who has decades of experience in assessing and investing in technology companies, most recently through Pereg Ventures.
This is a tiny company and will have to raise much more cash if it finds a deal. Even due diligence on technology companies can be costly. It could take a while to find a suitable target. The prospectus states that investors will not be asked whether the company should continue or be wound up –...

Vietnam Holding celebrates 15th anniversary

Liam Roche
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Vietnam Holding celebrates 15th anniversary

Vietnam Holding (LON:VNH), the closed-ended fund that invests in high-growth companies in Vietnam, is celebrating its 15th anniversary today. The London-listed investment trust, launched in 2006, has followed the Southeast Asian nation through its astonishing transformation since its inception.

History

The fund got off to a strong start in 2006, however, it was soon greeted by the destructive global financial crisis in 2008, which put the world economy in a stranglehold. Following the crisis, Vietnam underwent massive changes, surpassing Brazil as the world’s largest coffee exporter in 2012, followed by high levels of growth in 2013 after years of stagnation.

Vietnam has liberalised its economy over the past few decades and has recorded high economic growth in the process. With the country’s ideal location for manufacturing and established trade deals, in addition to a young and increasingly literate population, this phenomenon shows no sign of letting up. Vietnam was one of the highest growing economies in the world last year at just under 3%.

Over the past five years, the Vietnam Holding share price, now at 246.90p, has risen by 44.1%. Since its inception, 15 years ago, it has added 55.42%.

Vietnam Holding Portfolio

The fund’s portfolio is concentrated with two thirds of its holdings in its top ten companies. Fianancial services, the top sector, makes up 41.06% of the fund’s portfolio, closely followed by technology and real estate at 18.32% and 14.31%. Its weighting towards industrial goods and real estate play towards the aforementioned processes of industrialisation and urbanisation in Vietnam.

UK Investor Magazine Conference 

Vietnam Holding presented at the UK Investor Magazine Virtual Conference in March.

Craig Martin, Chairman of Dynam Capital, the manager of Vietnam Holding, presented the case of investing in Vietnam and provided detailed insight into the Southeast Asian economy.

Worker shortages cause slowdown in UK recovery amid ‘pingdemic’

Liam Roche
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0
Worker shortages cause slowdown in UK recovery amid ‘pingdemic’

IHS Markit UK composite PMI dropped to 57.7 in July

UK private sector growth is at its lowest point in four months, a survey by IHS Markit revealed, while staff shortages dragged on the economic recovery this month.

A phenomenon being referred to as the “pingdemic” is causing a number of healthy workers to isolate at home as they are alerted by the NHS test and trace app. Firms have reported back to IHS Markit that the “pingdemic” is causing material and staff shortages, resulting in the slowest recovery since March.

The stalling momentum is causing levels of optimism to fall to the lowest level in over nine months.

IHS Markit UK composite PMI dropped to 57.7 in July, down from 62.2 the previous month, representing a significant fall. Readings above 50 indicate an expansion in business activity.

Chris Williamson, Chief Business Economist at IHS Markit, commented on the figures released on Friday by IHS Markit: “July saw the UK economy’s recent growth spurt stifled by the rising wave of virus infections, which subdued customer demand, disrupted supply chains and caused widespread staff shortages, and also cast a darkening shadow over the outlook.”

“Although business activity continued to grow, aided by the easing of lockdown restrictions to the lowest since the pandemic began, the rate of expansion slowed sharply to the weakest since March.”

“Transport, hospitality and other consumer-facing services companies were the hardest hit, though manufacturing also saw growth weaken markedly during the month,” Williamson said.

BoE to make green gilts eligible for QE

Liam Roche
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BoE to make green gilts eligible for QE

The move caters to high demand for environmentally friendly investments

The Bank of England (BoE) revealed on Friday that it plans to buy new green gilts issued by the UK government later in 2021.

The move is part of the central bank’s asset purchase programme, which considers the gilts to be the same as other government debt.

In an effort to cater for high demand for environmentally friendly investments, the UK government intends to issue a minimum of £15bn of new debt during the current financial year.

David Barmes, Senior Economist at Positive Money, welcomed the Bank’s decision to make green gilts eligible across its operations. “The Bank should now go a step further and consider actively favouring green gilts in order to support green government spending and fulfill its mandate to support the net zero transition,” Barmes said.

Barmes also drew attention to other European nations which have been quicker out of the box.

“Compared to countries like France and Poland, the UK has been relatively slow to start issuing green bonds. With a huge green investment gap to fill ahead of COP26, the Bank and the Treasury should closely coordinate on how the government can rapidly expand its green spending while keeping borrowing costs low.”

The Bank of England confirmed that the green gilts will be equally eligible to already existing gilts. They can also be used as collateral in other BoE operations by banks.

IAG share price dives ahead of H1 results next week

Liam Roche
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0
IAG share price dives ahead of H1 results next week

IAG Share Price

The IAG share price (LON:IAG) is down by 11.84% over the past month as ‘Freedom Day’ and the ongoing relaxing of restrictions failed to support the airline in a sustained way. IAG has struggled to gain any momentum since the middle of March, when its share price looked as though it might take off, amid what in hindsight proved to be blind optimism. Year-to-date the IAG share price is up by 13.59%, however, the uncertainty and lack of passenger numbers is cause for concern for the airline.

Covid-19

While the already delayed ‘Freedom Day’ was supposed to be the point at which things could return to normal, it has proved to be nothing of the sort. Especially for those with a desire to travel internationally.

With reports saying cases could rise to 100,000 a day in the UK without restrictions, many Brits are having to isolate. This is causing demand for flights to dive as more people are being told to self-isolate, while many are cancelling pre-booked vacations.

IAG is having to carry on paying its fixed costs and is subsequently losing out on revenue, which is becoming increasingly concerning to investors.

Finances

That leads on to the the company’s balance sheet and how it is effecting the IAG share price. Back in May, IAG posted a loss of £1.14 billion in Q1. At the time the company decided not to provide a guidance for the following quarter due to the uncertainty. They were proved right as uncertainty has persisted throughout the second quarter.

Investors could soon have a clearer indication of IAG’s current financial predicament. IAG’s half year results will be revealed in a week’s time and will provide a clearer indication of the company’s outlook. It is possible that investors are anticipating negative results which could already be factored into the IAG share price.

Sterling down as Delta variant concerns investors

Liam Roche
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0
Sterling down as Delta variant concerns investors

The pound was 0.25% lower against the dollar early on Friday morning

Sterling dipped on Friday as retail sales surpassed expectations, while uncertainty remains over rising Covid-19 cases and the impact on the UK economy.

The reaction was muted in the FX market “with both EUR and GBP trying to recover some of the losses against the dollar, testing the $1.18 and $1.38 resistance levels,” Jesús Cabra Guisasola, Associate at Validus Risk Management, said.

The pound has held relatively steady over the past week amid the threat of a wide selloff in a number of currencies due to concerns over the spread of the Delta variant.

At 1116 GMT, the pound was 0.25% lower against the dollar at $1.3739, and down by a similar amount versus the euro.

Retail sales jumped in June, as football fans eat and drank their way through the Euro 2020 football championship, following a slump in May. 

The Office for National Statistics revealed on Friday that month-on-month retail sales in the UK rose by 0.5% between May and June.

Commenting on GBP and EUR reaction to the latest PMI figures, Jesús Cabra Guisasola said: “While the Eurozone PMI composite came out higher than expected in July 60.6 (vs 60 estimated) and rising for the fifth consecutive month, PMI in the UK fell considerably and unexpectedly to 57.7 from 62.2 in June, compared to the consensus of 61.5.”

“On the UK side, the economic recovery has been stronger due to the success in its vaccination programme and new daily Covid-19 cases have been coming in lower during the past few days. However, it will be important to see if this is sustained in the long run given the reopening could help to spread the virus more rapidly.

“Meanwhile, risks continue to be on the table for the euro area with the delta variant spreading across the continent. Moreover, inflation has been well below the ECB’s target, which has provided some further support for the central bank to maintain its ultra-dovish tone and favourable financing conditions.”

UK retail sales see resurgence in June, boosted by Euros

Liam Roche
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0
UK retail sales see resurgence in June, boosted by Euros

UK retail sales up by 0.5% month-on-month

Retail sales jumped in June, as football fans eat and drank their way through the Euro 2020 football championship, following a slump in May.

The Office for National Statistics revealed on Friday that month-on-month retail sales in the UK rose by 0.5% between May and June.

The figure is 0.1% higher than the expansion expected by economists, according to a poll by Reuters.

Sales at food stores, which saw increases of 4.2%, were the biggest contributor to June’s figures. The ONS also said that they were directly linked to the Euro 2020 football championship, in which England reached the final but fell short at the final hurdle.

“June’s retail sales have picked up again following the dip seen last month, with the main driver coming from food and drink sales, boosted by football fans across Britain enjoying the Euros,” said Darren Morgan, ONS director of economic statistics.

Danni Hewson AJ Bell financial analyst, commented on the latest retail figures:

“The crisp aisle in my local supermarket told the tale writ large in the latest UK retail figures; the day England trounced Germany the shelves looked like they’d been ravaged by nacho-loving hordes. The surge in instore food sales helped give a nice little lift to the sector which had seen a fall-back last month as consumers flocked back to bars and restaurants.”

Data also revealed that spending on home improvement products has slowed down, as non-food shop sales falling by 1.7% in June.

On the other hand, automotive sales rose, as workers increasingly need to find a way to get in to the office, while other are travelling within the UK for the holidays.

“With life finding its new normal more people were filling up their vehicles either for the commute or for a pleasure jaunt, but salesare still down on pre-pandemic levels with hybrid working expected to keep a lid on the number of times drivers need to go back to the pumps,” said Hewson.

“What these figures do share with us is the fact that people are spending and they’re embracing every new opportunity that comes their way. Novelty, excitement, opportunity, all key factors after months of constraints. Whether new freedoms will tempt more people out or push people to stay away from busy indoor spaces is a difficult question to answer and savings can only be spent once.”

FTSE 100 set to end the week in the green

Liam Roche
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0
FTSE 100 set to end the week in the green

At the end of a tumultuous week, the FTSE 100 has managed to recover from all the weakness and is on track to end the five-day session marginally ahead. Less than a couple of hours into the morning session the FTSE 100 is up by 0.76% to 7,021, having opened the week at 7008.9.

“Investors who panicked when global markets took a dive on Monday may now be regretting their decisions to dump holdings,” said Russ Mould, investment director at AJ Bell.

“Commodity producers helped to drive up the FTSE 100 on Friday, supported by several unloved stocks starting to regain favour with investors including BT and Rolls-Royce.”

Up next week is the latest meeting from the Federal Open Markets Committee. The market will be eagerly watching for any signs of a change to US central bank policy. “Investors are worried that economic growth could be losing momentum, but equally inflation is affecting us all. The Fed is unlikely to make any major changes to its current stance, but the market will look for every little sign of what the central bank could do next,” Mould said.

FTSE 100 Top Movers

Heading up the FTSE 100 on Friday is Rolls-Royce (3.06%), Melrose Industries (2.59%) and Natwest (2.48%).

At the other end, Royal Mail (-0.79%), Avast (-0.72%) and Flutter Entertainment (-0.50%), are the bottom three companies on the UK index, albeit with narrow falls.

Vodafone

Vodafone said its sales increased during the last quarter as its consumer and business operations saw improvements.

While the telecommunications company is not yet at pre-Covid levels, it made €11.1bn during Q1.

Upon the update by the company, the the FTSE 100 company’s share price is up by 2.2% during the morning session on Friday.

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