Wizz Air shares drop after posting profit decline, guidance unchanged

Investing.com -- Shares of Wizz Air Holdings Plc (LON:WIZZ ) were down over 3% on Thursday following its half-year results, which posted a net profit decline of 21.3% to €315 million. 

The results were broadly in line with analysts’ expectations, with the company's compiled consensus median also standing at €316 million. 

However, the figure fell short of the consensus average of €332 million, putting some pressure on the stock.

The airline’s guidance for full-year FY25 net profit remains unchanged, ranging between €350 million and €450 million.

This is above the consensus median forecast of €309 million, though analysts at RBC Capital Markets, who forecast €341 million for FY25.

“We think analysts will continue to view the lower end of guidance which may be in reach, particularly considering an FX headwind in recent days,” said RBC. 

Operating profit also suffered in the first half, falling by 33.2% year-on-year to €349 million. This figure came in below the market consensus of €460 million. 

The weak operating result was largely driven by rising costs, with total cost per available seat kilometre (CASK) increasing by 9.4%, which outpaced the 1.4% rise in revenue per available seat kilometre (RASK).

Wizz Air’s revenues were slightly up by 0.5% year-on-year, reaching €3.07 billion, helped by a small 1.4% increase in RASK, despite a slight decline in capacity of 0.9%. 

The company also reported a foreign exchange gain of €94 million in the first half, which provided a buffer for its bottom line. In comparison, the same period last year saw a €20 million foreign exchange loss.

Looking ahead, Wizz Air has revised its expectations for cost management. Ex-fuel unit costs are now anticipated to rise by a mid-teens percentage year-on-year, a steeper increase than the previous high-single-digit forecast. 

On the other hand, fuel costs are expected to decrease by 3-5%, better than the initially anticipated flat outlook. 

While the company has maintained its mid-single digit growth forecast for RASK, it has stated that demand remains strong, with no signs of softening, which could help support revenues in the second half of the fiscal year.

The airline's net debt stands at €4.76 billion, slightly reduced from €4.79 billion at the end of FY24, with leverage remaining high at 4.2x net debt to EBITDA. 

Source: Investing.com