- Busy summer bookings as first-half losses slashed
- Investors sceptical as cost of living spirals
- Analyst forecasts £14.2 million profit this year
This will be a big summer for holidays firm On The Beach (OTB) with consumers’ desire to get their two weeks in the sun tested by rising bills.
The company says booked sales in September and October 2021 beat the equivalent levels of 2019’s first half, before the pandemic, but Covid put the squeeze on bookings through November, December and early January this year.
Things have improved a lot since then. On The Beach does expect to start making profits again through the second half, helped by the business entering the premium travel market and sales starting to climb to pre-pandemic levels following the lifting of travel restrictions.
‘Management remains cautious regarding the consumer environment although with bookings resilient and the relaxation of Spanish restrictions supportive of the more value-seeking lates market, we leave our full year forecasts unchanged,’ said Numis today.
RETURN TO PROFIT PREDICTED
The broker anticipates pre-tax profit of £14.2 million for the year (to 30 September) on £146.7 million revenues, implying earnings of 6.9p per share.
Importantly, airlines are expecting capacity expansion of 10% to 15% this year so getting seats on planes at decent yields should not be an issue, Numis believes.
On The Beach saw half-year revenues to 31 March increase to £52.9 million, up from £4.4 million this time last year. Revenue as agent of £39.7 million was £5.3 million lower than 2019 levels because of subdued consumer demand until restrictions were fully lifted, however the Manchester-headquartered group managed to reduce loss before tax by £14.6 million to £7 million.
‘On The Beach shares have suffered along with peers in travel, down 28% in the last three months, and it now trades at 12-times earnings, nearly half its pre-Covid multiple,’ concludes Numis. Investors remain cautious, marking the stock down 7.5% to 222.5p, taking the year to date fall to 25%.
