During the summer Michael O’Leary looked as if he was losing his touch. The chief executive of Ryanair had mishandled his airline’s fuel hedging policy, abandoning the decision not to buy kerosene forward just as oil prices fell back from their record high.

He had spent hundreds of millions of euros on a stake in Aer Lingus only to be blocked from a full takeover, which surprised nobody but Mr O’Leary. And the Ryanair boss was taking delivery of dozens of new aircraft just as consumer demand was evaporating.

Europe’s largest low-cost operator was in danger of increasing supply in the face of falling demand and rising costs. So there must be some relief that Mr O’Leary used yesterday’s first-half figures to repeat his prediction that his airline would break even this year – a call that only weeks ago looked wildly optimistic.

Ryanair is continuing to grow despite the downturn. Fuel prices have taken their toll of the bottom line – net profits were down 47 per cent to €215 million (£172 million) – but total revenues rose 16 per cent and passenger numbers were up 19 per cent.

Ryanair is filling seats by slashing fares and will cut them by up to 20 per cent over the winter, roughly twice as much as expected. Very few other airlines in Europe have the cost structure to do anything similar, and Ryanair plans to win business by passing on the benefit of lower fuel prices to passengers.

Ryanair is also moving into new airports, and has scope to gain market share as rivals retrench or go bust. Last week’s announcement by bmibaby of a 15 per cent cut in capacity is clearly helpful. Ryanair also has room to cut costs further by automating check-in procedures.

Expanding through a downturn is dangerous but if Mr O’Leary’s tactic pays off, Ryanair will emerge from recession as a carrier that dominates tourist routes across the Continent. That brings with it the potential to raise fares as the economy recovers.

The big concern is the duration of the downturn, because Mr O’Leary cannot push growth at the expense of margins for ever. But at €2.82, the shares must be one of the few “holds” in a sector full of “sells”.

Chloride

That shares in Chloride have halved since its full-year figures in June owes less to a collapse in its forecast profits than the withdrawal by America’s Emerson Electric of its 270p a share bid for the UK maker of power protection equipment.

Emerson dominates that niche in the US but is sorely underweight in Europe – a gap that Chloride would have neatly filled. However, with Chloride shareholders in no mood to accept what at the time appeared a low-ball offer and capital markets tightening, Emerson walked away.

As yesterday’s first-half figures show, Chloride remains an attractive target. Revenues were up 25 per cent and operating profits ahead 41 per cent, helped by a continued improvement in operating margins to 13.5 per cent. Further, the company’s order book at the end of September stood at a record £123.7 million.

Such numbers confirm that the dynamic that has driven Chloride for the past few years – our growing dependence on computers and the feared financial consequences to its customers of a loss of power supply – still applies.

What has changed since the last downturn is that Chloride is a much leaner entity. It designs and maintains its own equipment but it has outsourced its manufacture, giving it a variable cost base that reduces the potential damage of a drop in demand. It has also diversified into the territories where the West’s factory capacity has migrated – first-half sales to manufacturing were up 42 per cent – and raised its exposure to higher-margin service activities, which continue to grow strongly (up 34 per cent). There are caveats: Chloride draws 7 per cent of sales from financial services, where IT expenditure will inevitably tighten.

Emerson is free to bid again next month and will doubtless return at some juncture. However, it is the ability of Chloride, up 15½p at 147¼p, or 12 times earnings, to keep growing that gives reason to hold.

Tarsus Group

It is not just the likes of WPP and United Business Media that are moving offshore. Smaller media companies such as Tarsus Group, the exhibitions organiser, are joining the exodus, too. Yesterday, Tarsus, which makes nearly all of its profits outside the UK, confirmed it will be tax resident in the Irish Republic from the start of next month.

That shift will benefit next year’s profits, as will the recent strengthening of the dollar, which explains why KBC Peel Hunt, the company’s broker, yesterday raised its 2009 earnings forecasts by 6 per cent. But any relief at that upgrade must be tempered by Tarsus’s admission of a weakening of trading in France, its biggest territory, which accounts for a third of sales. Its two Paris events this month are likely to produce lower revenues than last year.

The wider comfort is that 90 per cent of this year’s sales are already secured – a higher proportion than this time last year and that forward bookings for Tarsus’s biggest events in 2009 (Labelexpo Europe in Brussels and the Dubai Air Show) remain strong.

Exhibitions also tend to be the corner of the media sector least vulnerable to recession as few companies dare not attend their sector’s annual beanfeast and Tarsus has a strong portfolio of brands spanning healthcare, discount clothing and packaging.

The problem is that its dimunitive size (£70 million) and financial gearing (net debt of £36 million) is likely to deter investors for now. A merger with larger rival ITE Group, which has cash and a complementary geographical spread, is a longer-term possibility. However, even at 116½p, or 5.4 times 2009 earnings, there is better value elsewhere.

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