Travel firm’s profits up despite the heatwave
MANCHESTER headquartered travel company On the Beach posted a rise in profits despite a hot summer in the UK and the Nordics.
Pre-tax profit for the year through September rose 23.7 per cent to £26.1m, as revenue climbed 25 per cent to £104.1m.
The company said revenue was heavily impacted by the hot summer in Scandinavia leading to lower demand for holidays and widespread discounting by Sweden’s tour operators.
However the company adapted to the market by reducing its marketing spend.
The group also acquired Classic Collection Holidays in August for £20m.
EBITDA was reported at £1.1m in period since the acquisition.
Chief executive Simon Cooper said the profit improvement came despite the exceptionally hot weather in the UK and the Nordics combing with the World Cup to suppress holiday demand.
“Whilst this impacted our headline revenue growth during the period, the weaker demand also drove a significant reduction in the group’s marketing spend, ensuring growth in revenue after marketing costs remained strong,’ Cooper said.
“This is further testament to On the Beach’s resilient and flexible business model.”
Cooper said that although the first quarter of its financial year was historically its quietest period, the company could report a ‘strong’ early trading performance, supported by a slightly earlier release of summer capacity by budget airlines and lower winter seat prices.
“This current performance is in line with our expectations and the board believes the business is well positioned for the key trading period that commences in late December and continues into the first quarter of 2019,” he said.
“Whilst the consumer environment continues to be challenging, we remain confident in the resilience and flexibility of our business model.
“The board will also continue to evaluate acquisition opportunities that will both increase scale and deliver value for shareholders.”
Analysis Russ Mould, investment director at AJ Bell, said: “On The Beach has demonstrated the benefits of being agile and able to adapt to changing market conditions.
“In stark contrast to Thomas Cook’s profit warning on 27 November, On The Beach has managed to grow revenue, profit and its dividend by a substantial amount, clearly showing that you can still make decent money from selling holidays.”