Saga cruise bookings bounce back but over-50s specialist expects holiday business to suffer ‘small loss’ this year
- Saga says cruise bookings have been strong in recent months
- But holiday arm is expected to bring in a ‘small loss’ this year, group says
Saga expects to suffer a ‘small loss’ across its holiday arm in its first half and annual results.
But the firm told investors on Tuesday that holiday bookings for 2023/24 were showing ‘encouraging early signs’ and added that its cruise arm was performing strongly.
The over-50s-focused group said its cruise business recorded a booking rate of 73 per cent, with an expected full year load rate of around 75 per cent amid an ‘exceptionally strong booked load factor over the summer’.
Ups and downs: Saga said that while cruise bookings were strong, its holiday arm looked set to make a ‘small loss’
Bosses said they expect the company to generate underlying pre-tax profits of between £35million to £50million for the year ahead, which is in line with analyst expectations and up from a pre-tax loss of £7million last year.
Insurance sales have slowed however, with total policy sales across all products 2 per cent behind the prior year.
Saga shares fell today and were down 3.3 per cent or 5.50p to 161.40p in late morning trading, having fallen nearly 60 per cent in the past year.
Travel insurance policy sales bounced back to pre-pandemic levels in June, but sales of motor and home policies for five months ending June lagged 4 per cent behind 31 January levels and fell nine per cent on the same period last year due to decline in new business.
Motor and home margins per policy were broadly maintained at £73, reflecting strong retention offsetting significantly lower new business.
Euan Sutherland, Saga’s chief executive, said today: ‘During the first five months of the year, Saga has made good progress in what has been a particularly challenging external environment and we are pleased that we are on-track to return to an underlying profit for the 2022/23 financial year.
‘We have continued to adapt our Insurance business to meet the evolving needs of our customers, most recently through the development of new products, providing them with greater flexibility and choice. Meanwhile, our Travel business is continuing to make progress as we emerge from the pandemic.
‘At our full year results, in March, we set out an evolution of our strategic approach, to convert the foundations laid over the past two years into sustainable growth. This plan will see us focused on maximising our existing businesses, reducing our debt while step-changing our ability to scale the business and positioning Saga as the superbrand for older people.’
He added: ‘While the external environment remains challenging in the near-term, I am confident that our strategy, our people and our product offering will create long-term growth and value for our stakeholders.’
Russ Mould, investment director at AJ Bell, said: ‘The insurance business is the next challenge to face the company, as Financial Conduct Authority reforms to how prices are set for new and existing customers come into force.
‘A drop in new business dragged total policy sales down by 9 per cent year-on-year in the first half, as Saga also chose to defend its margins here.
‘Nevertheless, Mr Sutherland’s steer for underlying pre-tax profit for the year of £35million to £50million lies toward the low end of analysts’ expectations and the newly-refreshed board is going to be busy as Saga looks to navigate the inflationary squeeze on incomes, Covid and the war in Ukraine in an attempt to revive a rock-bottom share price.’