Dart Group PLC (LON:DTG) said it remains “optimistic” about meeting profit expectations for the 2020 year despite tough competition, cost pressures and weaker consumer confidence.
The company, which owns the Jet2 airline and package holiday businesses, said it made a satisfactory start to the 2020 financial year but has had to cut prices to entice less confident customers who are booking trips later than last year.
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“Nevertheless, with still some way to go in the booking cycle, the board remains optimistic that current market expectations for group profit before foreign exchange revaluations and taxation for the year ending 31 March 2020 will be met,” it said.
“Looking further ahead, the travel industry in general is facing cost pressures in relation to fuel, carbon and other operating charges which, together with the necessary continued investment in our own products and operations, including that required to attract and retain colleagues, are headwinds that the business faces.”
The group, which also owns the Fowler Welch distribution business, issued the cautious outlook in its results for the 2019 financial year.
2019 profits and revenues led higher by travel business
In the year to the end of March, pre-tax profit gained 36% to £177.5mln on revenue up 32% to £3.1bn.
The leisure travel division delivered a 38% increase in pre-tax profit to £173.2mln and a 34% rise in revenue to £2.9bn.
The Jet2 airline flew 12.82mln passengers, compared to 10.38mln last year, while Jet2 package holiday customer numbers rose to 3.17mln from 2.50mln.
Revenue at Fowler Welch grew by 6% to £178.7mln, supported by two major contracts, but pre-tax profit fell by 2.2% due to operational inefficiencies at certain depots.
Dart Group raised its final dividend by 23% to 7.4p, taking the total payout for the year to 10.2p, up 36% on last year.
Shares rose 2.9% to 866.5p in morning trading.
Liberum analysts said: "In terms of read across to easyJet (Hold, target price 1,100p) and Ryanair (Buy, target price €12.50), Dart’s comments are consistent with the broad trends previously highlighted by the other airlines, and the likely avoidance of cuts to consensus estimates is a mild positive."