On the Beach shares fell on Tuesday after the group reinstated full-year guidance, as the Middle East conflict began to weigh on demand in early March.
But this guidance fell short of expectations, and shares sank 16% on Tuesday as the group reported results for the six months ended 31st March.
Booking volumes rose 7% to a record 324k, with travelled volumes up 22% to 201.6k as customers worked through stronger Winter and City breaks. Booked TTV edged up to £626.2m.
However, the impact of the war was felt and adjusted revenue came in at £52.9m (down £6.4m), with adjusted EBITDA of £6.4m and adjusted PBT of £2.3m, both materially below the prior year.
Cancellations linked to the Middle East conflict and an industry-wide shift to later bookings were to blame.
A softening in profits was expected, but the reinstatement of guidance raised some eyebrows among analysts.
“It’s a surprise to see On The Beach reinstate profit guidance, having previously withdrawn it as the Middle East conflict unfolded. There is still considerable uncertainty around jet fuel supplies and oil prices remain high, which is putting pressure on consumers and questioning their ability or willingness to splash out on holidays,” said Dan Coatsworth, head of markets at AJ Bell.
“The profit guidance is significantly below market expectations, hence the negative share price reaction. Analysts had pencilled in £35.5 million pre-tax profit for the year, yet On The Beach now expects between £18 million and £25 million. That’s a wide range and the bottom end of guidance is effectively half of what the market thought the company would make.”
There are some positives to take away from the update that could suggest the firm bounces back when tensions in the Middle East settle.
Search funnel conversion rose 24%, app monthly active users were up 29%, the app now accounts for 38% of all bookings, and in-year repeat bookings climbed 24%.
On the Beach shares were down 16% at the time of writing.