Difficult markets threaten to undermine the genuine progress made by On The Beach (OTB) to diversify and invest in its business. Adjusted pre-tax profits were up 14 per cent in the six months to March, on revenue growth of 41 per cent, but management warned that the “ongoing uncertainty” arising from Brexit meant trading in the travel market was 10 per cent weaker in 2019.
Management said it would be cautious of the consumer environment until Brexit was resolved, but in the meantime has been maintaining its strategy of investing in its marketing, people and platform. Here it is making progress on many fronts. The group opened its new digital headquarters in Manchester in the period, aimed at helping it attract new talent, and expanded its operational headquarters in Cheadle. Also, it launched Classic Package Holidays, an online booking portal for travel agents to complement its growing business-to-business offering, which kicked off with the acquisition of Classic Collection Holidays last August.
The collapse of Danish airline Primera Air last October affected revenues in the international division, but the group said it offset this with a 75 per cent reduction in marketing spend. The decrease was more muted in the broader group, falling from 48 per cent of revenues to 43 per cent, but management reported record levels of brand awareness and branded traffic.
House broker Peel Hunt trimmed forecasts to reflect depressed bookings, but still expects adjusted EPS to rise to 23.3p for the September 2019 year-end, from 21.2p in FY2018.
| ON THE BEACH (OTB) | ||||
| ORD PRICE: | 441p | MARKET VALUE: | £578m | |
| TOUCH: | 438.2-441.2p | 12-MONTH HIGH: | 574p | LOW: 326p |
| DIVIDEND YIELD: | 0.8% | PE RATIO: | 25 | |
| NET ASSET VALUE: | 95p* | NET DEBT: | £1.3m | |
| Half-year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2018 | 45.1 | 10.6 | 6.3 | 1.10 |
| 2019 | 63.5 | 11.9 | 7.3 | 1.30 |
| % change | +41 | +12 | +16 | +18 |
| Ex-div: | 30 May | |||
| Payment: | 28 Jun | |||
| *Includes intangible assets of £86.3m, or 66p a share | ||||
