Profits at Ryaniar expected to soar

Profits at Ryaniar expected to soar

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The City will look for more details on how the new boss at Marks & Spencer plans to turn the retailer around, profits at airline Ryanair are expected to soar despite recent terror attacks, while top brass at Royal Dutch Shell will be wary of a rough ride over pay at the oil major’s AGM.

M&S’s new boss Steve Rowe will be looked to for further details on his turnaround plan for the retailer’s beleaguered clothing division when he reports full-year figures on Wednesday.

Mr Rowe – who took on the top job from Marc Bolland in April – pledged to restore the fortunes of its general merchandise arm after reporting a 2.7% slide in like-for-like sales for the 13 weeks to March 26.

He branded the performance as ”unsatisfactory” and has said he would remain in charge of the clothing business because he was ”personally committed” to getting it right.

He has a task on his hands, however, given the dismal conditions for womenswear retailers in April, with Next recently warning over profits after last month’s cold weather.

It said the lacklustre figures could indicate a wider slowdown in consumer spending.

But despite the ongoing woes at the clothing division, M&S’s annual underlying pre-tax profits are expected to edge higher, up 1.8% to £673 million.

This would mark the second full-year profits rise in a row after it halted a four-year run of falling earnings in the previous year.

M&S has been helped by robust performance from its food division, which held like-for-like sales flat against tough conditions in the grocery sector amid a supermarket price war.

The chain has also been making efforts to cut sourcing costs in the general merchandise business, which is helping push up profits.

But investors will be keen to hear more on Mr Rowe’s plans for the group following his move to cull a raft of senior executives earlier this month.

He announced he will almost halve the number of senior executives from 20 to just 11 as part of a management reshuffle.

The group has also recently scored another coup for its clothing business in the fight to revive flagging sales by sealing a tie-up in February with TV presenter Alexa Chung to launch a fashion collection inspired by the company’s extensive range.

Shore Capital analysts said they have faith in the new chief executive, saying: “M&S is in good hands, to our minds.”

Budget airline Ryanair is expected to report a boost in full-year profits on Monday as it continues to cut prices to attract passengers in the wake of recent terror attacks.

The City expects to see the Dublin-based airline’s annual profits after tax jump 44% to €1.3bn compared to a year ago, as it drives down fares in the face of weakening demand caused by the atrocities in Brussels and Paris.

The impact of the recent EgyptAir plane crash may further weaken the appetite for international travel over the coming months.

The airline said in February profits after tax more than doubled in its third quarter to December 31, up from €49m in 2014 to €103m last year.

The carrier said average fares were down 1% to €40 in the three months to December 31. It also pencilled a fares fall of 6% for the fourth quarter.

It said it would deliver cheaper air fares by capitalising on record-low oil prices and passing down the savings made on its fuel hedges to consumers.

Analysts at Cantor Fitzgerald said: “Growth in the past few years has been exceptional and Ryanair’s expansion plans are ambitious.”

But the broker added: “We are concerned that earnings momentum may be difficult to maintain, particularly as the persistently low fuel price is sucking more capacity into the market.”

Earlier this month Ryanair boss Michael O’Leary warned that the budget airline will be forced to scale back British investment if the country votes to leave the European Union.

He appeared on a platform with Chancellor George Osborne at Stansted Airport and announced the creation of 450 new jobs in Britain as part of a $1.4bn investment into the Ryanair’s 13 UK bases.

But Mr O’Leary said: “It is exactly this type of investment that will be lost to other competitor EU members if the UK votes to leave the European Union.”

Last month, rival easyJet has swung to a half-year loss after it said the recent terror attacks saw some passengers stay away and rivals stepped up the pace of competition.

The no-frills airline posted losses of £24m for the six months to the end of March against profits of £7m a year earlier, but said its bottom line was hit by a £33m foreign exchange rate impact.

Bosses at Royal Dutch Shell will face shareholders at the group’s annual general meeting on Tuesday amid concern over the chief executive’s “unacceptable” £4m pay deal.

Investors have been urged to vote against the firm’s remuneration report in protest at Ben van Beurden’s pay for 2015, even though it marked a significant reduction from the €24.2m he was paid in 2014 in the wake of plunging profits.

Shell’s latest annual report revealed boss Mr van Beurden’s total pay for last year was €5.6m – a 77% fall on 2014 after the tumbling cost of crude took its toll on the group.

But shareholder advisory firm Pirc said he still earned 37 times the average employee’s pay, which it branded as “unacceptable”.

Pirc added that his maximum annual bonus and potential rewards under the long-term shares scheme were also “excessive”, at 245% of salary and 680% of salary respectively.

Shell – which completed its mammoth $52.6bn takeover of gas rival BG Group in February – saw annual earnings tumble to $3.8bn in 2015, from $19bn in 2014.

It has remained under pressure since the year-end, posting a 58% drop in first-quarter profits to $1.6bn as the falling oil price continues to hammer the sector.

But the first quarter figures were better-than-feared, while Mr van Beurden said the BG merger had got off to a “strong start”.

Shell is pushing ahead with plans to cut jobs and close offices following the BG merger and to offset lower oil prices.

It said it may close three offices, including the former BG Group headquarters at Thames Valley Park, Reading; BG’s offices at Albyn Place, Aberdeen; and Shell’s Brabazon House office, Manchester.

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