Saga expects “significant” growth in profits as demand for holidays increases
- Saga reported that turnover rose 15% to £355.3m in the six months to July
- The absence of travel restrictions has led to a massive rebound in foreign travel.
- The number of customers in its travel division increased by a quarter to around 25,700
Saga expects annual revenue and profits to exceed market forecasts this year, following a continued strong recovery in demand for overseas holidays.
The 50-plus specialist told investors it expects a “significant” double-digit expansion in sales and underlying pre-tax profits for the financial year ending January 2024.
In the six months to July, Saga’s turnover rose 15 per cent to £355.3m thanks to the strong performance of its cruise and travel businesses.
Forecast: Saga told investors it anticipates seeing a “significant” double-digit expansion in sales and underlying pre-tax profits for the fiscal year ending January 2024.
The absence of travel restrictions and the widespread rollout of Covid-19 vaccination programs have led to a significant uptick in pensioners booking trips abroad over the past two years.
Saga’s river and ocean cruise operations returned to underlying profits in the first half after achieving a passenger load factor of 83 percent.
Meanwhile, customer numbers in the travel sector, home to the Saga Holidays and Titan brands, rose by a quarter to around 25,700, having been hit the previous year by disruption within the airline sector.
The Kent-based firm said the travel business will return to annual profits, with booked revenue up to last week up 46 per cent on the same time in 2022 and further growth expected.
Euan Sutherland, chief executive of Saga, said: “Looking ahead to the full year, we are maintaining tight control of our costs and are confident that we will achieve significant double-digit growth in underlying revenue and profits that will be ahead of market estimates. ‘
But Saga warned that its insurance brokerage division would likely post weaker profits this year due to much tougher conditions in the motor industry.
Vehicle insurers have been increasingly hit by rising claims inflation amid a sharp rise in repair, labor and insurance costs. second hand cars.
Currently, under Financial Conduct Authority rules, the sector is prohibited from “repricing”, meaning offering cheaper premiums to new customers and charging more to those who renew their contract.
Russ Mould, investment director at AJ Bell, said: “At some point, it can be argued that Saga should divest itself of the entire insurance operation and focus solely on being a specialist travel operator.”
In January, Saga confirmed it was looking to sell its insurance underwriting division, but has since paused the planned sale in the hope of securing a better deal when conditions in the insurance market improve.
The company has said the proceeds from such a sale would go towards reducing its huge debt, which stood at £657.4m at the end of July.
saga actions They were down 0.5 per cent, or 0.6p, to £1.22 on Wednesday morning and remain more than 90 per cent lower over the past five years.