- Group pre-tax profits top end of expectations
- Summer 2023 passenger numbers 11% ahead of 2022
- Winter bookings ahead by 26%
Shares in On The Beach (OTB) were up 14% to 118p in morning trading as the online package holidays in the sun seller said that the group’s adjusted pre-tax profits would be at the top end of market expectations for the year ending 30 September 2023.
Analysts at Shore Capital previously forecast earnings before interest taxation depreciation and amortisation (EBITDA) of £30 million and adjusted pre-tax profits of £19 million.
The upbeat guidance can be attributed to a fall in On The Beach’s segment marketing costs – 40% versus 45% last year – as expected along with ‘higher anticipated interest income.’
‘We believe our forecasts could be viewed as prudent, implying an average mid-single revenue growth from full year 2024, a build in profitability with EBITDA margins trending back towards 19% (still below pandemic levels) and net cash growing to £111 million by full year 2025,' said analysts at Shore Capital.
‘This morning’s update is encouraging, in our view, also noting positive market commentary stated elsewhere by listed UK travel peers, however, we are conscious we are still at the start of the financial year.
‘If trends continue within higher value segments, along with ongoing favourable supply/demand balance, then risk is likely on the upside, but we will review this as the year progresses.'
SHARE PRICE FALL AND NEW CEO
Today's upward share price move is in stark contrast to its year-to-date performance which has seen its shares fall nearly 25%.
Shares in On the Beach fall 15% as marketing splurge keeps business loss-making
The company has experienced a difficult year with a change at the top, On The Beach’s former CFO Shaun Morton replacing founder and CEO Simon Cooper.
Back in May it reported a £6 million pre-tax loss for the six months to 31 March 2023, versus a £7 million loss a year earlier, as profits were wiped out due to extra marketing spend.
BOOKINGS AHEAD OF THE PREVIOUS YEAR FOR 2024
On The Beach expects record Total Transactional Value (TTV) of circa £1.1 billion ‘driven by growth in volumes and average booking values’ (ABV) – a rise of 26% year-on-year.
‘Notwithstanding that it remains in its early stages, bookings for Summer 24 are also significantly ahead of the prior year,’ the company added.
The online package holiday retailer said it was also growing volumes and ABV in its ‘core addressable market and ‘strategic expansion segments’ which will deliver a circa 70% increase in TTV for long haul bookings and a circa 30% increase in Premium TTV by year-end.
The company will be announcing its preliminary results on 5 December 2023.
