Shares in On The Beach (LON:OTB) bounced after the online package holiday specialist said FY26 profits will land in the top half of previous guidance. The upgrade follows a strong summer season for the Manchester-headquartered firm.
On the Beach is also enjoying ‘strong booking momentum’ into FY27, with total bookings up 17% in the last eight weeks.
In a brief pre-close trading update, On the Beach guided to FY26 adjusted pre-tax profits of £22 million to £23 million for the year ending 30 September 2026. That is in the top half of the £18 million to £25 million forecast given at the H1 results in May.
Strong booking momentum
Summer 2026 booking momentum grew strongly, 4% ahead of FY25 in fact, having been 1% behind at the time of the H1 results. According to On the Beach, this uptick reflected the shorter lead-time booking profile seen across the sector.
On the Beach also announced FY27 pre-tax profit guidance in the £28 million to £35 million range, which the board is confident of delivering in the year ahead. This would represent healthy year-on-year growth of between 25% and 55%.
This surprisingly sunny earnings outlook reflects On the Beach’s current positive trading momentum, though management remains ‘mindful of the ongoing conflict in the Middle East and the broader UK consumer backdrop’.
What did the CEO say?
CEO Shaun Morton said: ‘We are pleased to have delivered an FY26 adjusted PBT performance in the top half of our guidance range, following a strong summer 26 season.
| Medium-term ambition | On the Beach |
| Group TTV (total transaction value) | £2.5bn |
| EBITDA | £100m |
| Pre-tax profit | £85m |
| Earnings per share | 38.7p |
Source: On the Beach, FY25 annual report
‘The progress being made across the business reflects the strategic investments we have made in technology, in our expanded product offering, and in our brand. These initiatives are translating into market share gains and deeper customer loyalty, including bookings from repeat customers up 18%, underpinning our confidence in the group’s prospects for the year ahead.’
Despite a volatile backdrop, this package holiday market disruptor has delivered an upbeat outlook, continues to trade profitably and is generating cash.
The company is debt free with around £60 million of cash in the coffers, which provides optionality for dividend increases and further earnings-enhancing share buybacks. As Sharesify has previously pointed out, On the Beach has significantly lower fixed costs and exposure to variable costs than the asset heavy tour operators.
Overseas leisure travel spend continues to grow year-on-year, and within that, package holidays continue to grow in popularity.
And yet shares in On The Beach are flashing red over one and five years due to the turbulence that frequently afflicts the holiday industry. Given the cost-of-living pressures facing holidaymakers, and the potential for geopolitical turbulence and rising jet fuel costs to hurt the travel sector, the shares are for risk-tolerant investors only.
