Dark clouds are threatening On The Beach (OTB) as it reports a £1.1m hit from the 2017 collapse of Monarch Airlines, dragging sales below expectations. The shares fall 11.9% to 573p.
Sales at the beach holiday provider jumped 19% to £45.3m but this was below broker Numis’ forecasts of £47m for the six months to 31 March. Over the same period, pre-tax profit was 9% higher at £10.8m.
HIGHER PRICES HIT BOOKINGS
Monarch’s shocking demise in 2017 has helped airlines such as EasyJet (EZJ) take market share and has also led to more constrained capacity and higher seat prices, thereby putting pressure on On The Beach's winter bookings.
In the UK, sales after marketing costs rose at slower rate of 19% to £44.4m compared to 23% in the four months to 31 January.
Overseas sales, for now a modest contributor to the group total, jumped 51% in the half year to 31 March. Sweden enjoyed its strongest trading since launching in 2015 as more investment supported growth in both Sweden and Norway.
CUT IN PROFIT FORECASTS
Numis analyst Richard Stuber has cut forecast pre-tax profit by 4% to £34.2m and sales by 5% to £99.8m in the year to 30 September.
Despite the setback, Stuber is confident On The Beach can continue to benefit from structural growth in short-haul package holidays with its lean cost base and personalised deals.
