On the Beach announces £26.1 million pre-tax profit

OTA On the Beach saw its pre-tax profits rise by almost a quarter in the year to the end of September, despite increasing losses in its international markets.

Its preliminary results, posted today, show a 23.7% rise in group adjusted pre-tax profit to £26.1 million on revenue of £104.1 million, which was 24.5% up year on year. As a result, it is paying a dividend of 3.3p.

Revenue from its core businesses, Onthebeach.co.uk and Sunshine.co.uk, was up 9% to £89.3 million. Branded and free traffic to its websites rose from 59.3% to 63.9%.

After significant growth of 51% in the first half of the year, international revenue slumped 5.9% to £1.6 million for the full year, which was £100,000 down on 2017. The group said revenue was ‘heavily impacted’ by the hot summer in Scandinavia leading to lower demand for holidays and widespread discounting of distressed product by the country’s leading tour operators.

As a result, the group’s loss in its international markets increased from £2 million last year to £2.2 million this year. Nevertheless, On the Beach expanded into a third international market, Denmark, in 2018.

Classic Collection Holidays, which On the Beach bought in August for £20 million, contributed pre-tax earnings of £1.1 million.

Chief executive Simon Cooper said he was pleased with the Group’s performance, adding: " This performance was delivered despite the previously highlighted exceptionally hot weather that was prevalent over the summer in the UK and in the Nordics, which combined with the football World Cup, supressed 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. This is further testament to On the Beach’s resilient and flexible business model."

Cooper said the purchase of Classic gives On the Beach access to five million short-haul beach holidays that are booked offline each year. It will launch an online agent-only booking website, Classic Package Holidays, early next year.

"We remain confident in the resilience and flexibility of our business model to capitalise on any structural changes in the market," added Cooper. "On the Beach continues to successfully build a leading position as more consumers discover the ease of use and wide choice of beach holidays that our platforms offer."

He said the first quarter of its financial year, which is traditionally the quietest, showed strong early trading, which has been supported by a slightly earlier release of summer capacity by major low-cost airlines, seat prices for winter and a continued efficiency in marketing spend.

"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 Q1 2019.

"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."