Travel firm On The Beach PLC (LON:OTB) has reported a strong performance in its latest half-year, however the shares fell on Tuesday as Brexit caution clouded its outlook.
For the six months ended 31 March, the group reported an adjusted pre-tax profit of £15.7mln, up 14% year-on-year (YOY), while revenues surged 41% to £63.5mln.
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As a result of the improved results, OTB hiked its interim dividend by 18% to 1.3p per share.
Simon Cooper, chief executive, said “modest” booking growth and more efficient marketing had helped the group post a “solid performance” against what he said was a “soft background market”, joining the chorus of companies in blaming the “uncertainties” around Brexit for reduced consumer demand for holidays.
The Brexit cloud also cast a shadow over the group’s outlook for the rest of the year, with Cooper saying the firm would “continue to remain cautious” of the consumer environment until a resolution could be found to the impasse, which has deadlocked the UK’s politics and government for months.
Despite this, the company said the “resilient and flexible” nature of its business model gave it “confidence” in its outlook.
Investors, however, were less confident, with the shares falling 3% to 437.2p in early trading.
In a note to clients, analysts at Numis sad they would be “conservatively trimming” their estimates for OTB on the back of the cautious outlook as well as other industry commentary, citing data from Barclaycard that April had seen a 4.6% fall in travel agent spending YOY.
"We are moderating our [2019] OTB UK revenue growth from 11% to 6%...and cutting [pre-tax profit forecast] by 4% to £37.8mln".
Numis currently has On The Beach at a ‘buy’ rating with a target price of 556p.