Capacity can be a sensitive subject in the European travel sector, but so far Dart (DTG) appears to have managed this market-wide challenge. Revenue from the leisure travel business increased by a third to £2.96bn over the year to March 2019, with operating profit up 63 per cent in the division to £199m, pushing up the profit margin by 1.2 percentage points to 6.7 per cent. This was achieved despite a £147m operating loss in the second half as Dart spent on new aircraft orders.
Over the financial year, Dart increased its capacity by almost a quarter to 13.8m seats available, yet still managed to increase the percentage of seats filled slightly to 92.8 per cent. Both packaged holidays and flight-only prices improved over the period, with the average package holiday price increasing by 6 per cent to £669 and flight-only ticket yield per passenger 12 per cent higher at £81.79.
Despite these positive developments, management appears cautious about the current financial year. “Less confident consumers” are putting off booking a holiday until later in the year, meaning that pricing for its leisure products must remain competitive. As of the end of March, advanced sales were up by 17 per cent on the same period last year, at £1.73bn. Increasing fuel costs are also a concern for all airline operators. For Dart, the average hedged price of fuel was 17 per cent higher at $604 (£474) a tonne, with 90 per cent of fuel requirements hedged over the next 12 months.
At Fowler Welch, Dart’s distribution and logistics business, revenue increased by 6 per cent to £179m after two significant contracts began operations mid-way through the financial year. But higher operating costs resulted in a 2 per cent decline in operating profit to £4.3m, and the profit margin was marginally lower at 2.4 per cent.
Analysts at Canaccord Genuity expect adjusted pre-tax profits of £155m during the year to March 2020, giving EPS of 85.5p, increasing slightly to £156m and 85.7p in FY2021.
| DART GROUP (DTG) | ||||
| ORD PRICE: | 860p | MARKET VALUE: | £1.28bn | |
| TOUCH: | 856-861p | 12-MONTH HIGH: | 1,052p | LOW: 736p |
| DIVIDEND YIELD: | 1.2% | PE RATIO: | 9 | |
| NET ASSET VALUE: | 400p | NET CASH: | £291m | |
| Year to 31 Mar | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2015 | 1.25 | 40 | 22.4 | 3.0 |
| 2016 | 1.41 | 104 | 60.2 | 4.0 |
| 2017 | 1.73 | 90 | 51.8 | 5.3 |
| 2018 | 2.38 | 130 | 72.2 | 7.5 |
| 2019 | 3.14 | 178 | 98.0 | 10.2 |
| % change | +32 | +36 | +36 | +36 |
| Ex-div: | 19 Sep | |||
| Payment: | 25 Oct |
