27th Nov 2019 10:46
(Alliance News) - The demise of Thomas Cook presents an "unprecedented opportunity", On the Beach Group PLC said Wednesday, though it has had a short-term impact on profit.
Package holiday firm Thomas Cook went bust in September, sparking Britain's biggest repatriation since World War II, after it failed to secure funding.
"The failure of Thomas Cook has led to a material shift in market dynamics as it had a 20% share of beach holiday passengers and approximately 20% of the seating capacity to beach holiday destinations," said On the Beach Chief Executive Simon Cooper on Wednesday.
"This has created a significant short-term lack of seat capacity as well as an unprecedented opportunity in the medium-term to gain share."
In the short-term, it has led to a 26% decline in pretax profit for On The Beach in the year to September 30 to GBP19.4 million, though the adjusted figure climbed 3% to GBP34.6 million.
The demise of Thomas Cook led to On the Beach having to provide refunds to customers who had booked package holidays with On the Beach but flights with Thomas Cook, and also meant it had to pay for alternative travel arrangements. The overall cost to On the Beach was GBP25.6 million.
Manchester-based On the Beach's revenue climbed by 35% to GBP140.4 million.
The Manchester-based company is paying a final dividend of 2.0 pence per share, taking the year's total to 3.3p, the same as the prior year.
"In what has been a difficult general economic climate with the prolonged uncertainty regarding Brexit and the related currency impacts, I am pleased with the group's performance with significant progress made against our strategic objectives while delivering a 3% increase in group adjusted profit before tax, in line with market expectations," said CEO Cooper.
"Following the failure of Thomas Cook, all teams across our business responded exceptionally to ensure that customers were either re-booked or refunded in the shortest possible time while maintaining high-quality customer care."
On the Beach said Brexit and generally weak consumer confidence has led to a dip in demand for short-haul beach holidays in the UK. This has been compounded by a weaker pound, though this has since improved, helping forward sales for the summer of 2020.
The first quarter of On the Beach's financial year is the quietest one, it said. Though consumer confidence remains weak, it said, the company is confident on increasing market share.
Shares were 0.8% higher on Wednesday at a price of 437.60 pence each.
By George Collard; [email protected]
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