- Profit Growth: 9% increase in profit before tax (PBT) to GBP 665 million, marking the third consecutive year of earnings growth.
- EBIT Improvement: Operational EBIT rose 18%, driven by GBP 56 million from holidays and GBP 50 million from the airline segment.
- Holidays Segment Success: Profit surged 32% to GBP 250 million, with 20% growth in packaged holiday customers and early achievement of medium-term targets.
- Balance Sheet Strength: Net cash improved to GBP 602 million, with owned assets reaching GBP 4.8 billion and a target of GBP 7.5 billion by 2028.
- Return on Capital Employed (RoCE): Increased to 18% from 13%, reflecting stronger capital efficiency and asset utilization.
Operational Highlights
The company's operational performance was strong, with EBIT improving by 18%, driven by a GBP 56 million improvement in holidays and GBP 50 million in the airline segment. The holidays segment reached its medium-term target of GBP 250 million ahead of schedule, and the company is now targeting GBP 450 million by 2030. The airline segment is also benefiting from upgauging its fleet, with a expected GBP 3 per seat benefit, 60% of which is expected to be delivered by 2028.
Balance Sheet Strength
easyJet's balance sheet position has improved significantly, with owned assets increasing to GBP 4.8 billion and net cash improving to GBP 602 million. The company expects to increase its owned asset position to over GBP 7.5 billion by 2028, indicating a strong commitment to investing in its business. The reduction in ownership costs linked to buybacks has also been taken into account for next year, with a focus on reducing costs and improving profitability.
Valuation and Outlook
With a P/E Ratio of 9.1 and an EV/EBITDA of 4.16, easyJet's valuation appears reasonable, considering its strong earnings growth and improving profitability. The company's ROE of 14.65% and ROIC of 6.16% also indicate a strong return on equity and invested capital. Analysts estimate revenue growth of 7.9% for next year, and with a strong late booking trend and improving pricing environment, easyJet is well-positioned for continued growth.
Challenges Ahead
Despite the strong performance, easyJet faces challenges in reducing losses during the winter season, due to increased capacity and competition. However, the company remains confident of delivering its GBP 1 billion target and is working to improve its Q1 performance, with new winter destinations and the maturation of existing routes. The company's focus on cost reduction and improving productivity will also help to drive profitability.