On The Beach reinstates dividend, announces £25m share buyback
By Michele Maatouk
Date: Tuesday 03 Dec 2024
(Sharecast News) - On The Beach surged on Tuesday after the package holiday firm reinstated its dividend and announced a £25m share buyback as it posted a rise in full-year profit and revenue.
In the year to 30 September, adjusted pre-tax profit rose 25% to £31m, with revenue up 14% to £128.2m.
OTB hailed record total transaction value (TTV) for the third year in a row, up 15% to £1.2bn.
The company said growth has continued into the new year, with year-to-date TTV up 14% and bookings growth of 15% versus the same period a year earlier.
It also said the forward order book is at record levels, with group Winter '24 YTD bookings up 25% as customers seek winter sun or a European city break.
OTB said current trends and strategy give it confidence that Summer '25 will be "significantly" ahead of the previous year.
The company declared a final dividend of 2.1p per share, giving a full-year dividend of 3p. It also announced a share buyback of up to £25m.
Chief executive Shaun Morton said the company was entering FY25 "in better shape than ever".
"This performance was driven by a combination of initiatives, including the successful integration with Ryanair, ongoing investment in our proprietary technology platform and further enhancements to our differentiated customer proposition," he said.
"The partnership has facilitated an improved customer journey for those booking Ryanair flights as part of an OTB package, whilst enabling increased operational efficiency and a greater focus on areas of strategic value. What's more, the agreement and significant upgrades to our technology have supported a doubling of our addressable market, following the addition of city breaks to our offering alongside planned investment in Ireland.
"Our strategy and positive booking trends, underpinned by our track record of delivery, gives us every confidence in delivering on our medium-term ambition to double TTV to £2.5 billion, achieve EBITDA of £100 million and adjusted profit before tax of £85m."
At 1250 GMT, the shares were up 22% at 209.50p.
Dan Coatsworth, investment analyst at AJ Bell, said: "Shareholders will be popping out the cocktail umbrellas as specialist holiday provider On The Beach demonstrated the benefits of a Ryanair partnership as it enjoyed a record summer and reinstated dividends alongside a share buyback.
"On The Beach sells beach holidays online and earns a commission on these sales. It has no physical sites and doesn't own planes, which means it does not need to employ lots of capital to grow. Its main costs lie in marketing. The company also sells holidays offline through third-party travel agents.
"What's put the market in a sunny mood are the company's ambitious medium-term targets for sales, earnings and margins. The company has experienced slowing demand at the more budget end of the market, showing that pressures on household spending are having a negative impact, although this represents a decreasing share of the company's overall business.
"On The Beach is looking to boost its exposure to long haul beach holidays and has begun serving customers in the Republic of Ireland. Targeting city breaks is also seen as an opportunity."
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