On The Beach has said bookings have improved since the Iran war prompted a diversion away from resorts in the Middle East , but that holidaymakers remained cautious and were leaving it later to organise trips.

The package holiday firm said it was reintroducing its annual profit outlook but at a lower level than analysts had previously expected as a result of the disruption.

It had suspended forecasts last month following concerns the conflict would impact holiday bookings and warned that it was expecting profits to take a hit.

The new forecasts show the company generating an adjusted pre-tax profit in the range of £18 million to £25 million.

This is lower than the £39 million to £43 million range that analysts had previously been expecting.

The change sent shares in the business tumbling by about 16% on Tuesday morning.

On The Beach said that although it does not have much exposure to countries in the Middle East, it experienced a sharp slowdown in demand following the onset of the US-Israel’s war with…