Saga surges towards profit in ‘stronger than expected’ six months
Over 50s specialist Saga reported a “stronger than expected” six months this morning after announcing last week that it was looking to sell a stake in its cruise business to cover its debts.
In a trading update, Saga revealed that over the last six months, revenues increased by between 10 to 15 per cent, while underlying profit before tax for the firm more than doubled compared to the previous year.
Following the announcement, the firm’s stock price has risen by over seven per cent.
Investec analysts Rahim Karim and Jens Ehrenberg highlighted that the group had delivered “material operational and strategic progress” throughout last year, “with almost all of the businesses tracking in line or ahead of expectations” in a “stronger than expected” six months
The firm reconfirmed that it was looking for opportunities to “optimise” its cruise business, which could include a partnership deal, but did not provide any further updates.
In today’s results, the firm reported that customer demand had continued to improve for the cruise arm, with it receiving £40m of profit per ship, excluding overheads.
“The enhanced propositions in river cruises and travel are expected to support a return to profitability in the current year for both businesses,” added Investec’s Karim and Ehrenberg.
However, motor and home policy sales in its insurance arm saw a nine per cent fall, but the Investec analysts noted this represented a wider trend across the industry, and pointed to “continued attempts by management to refocus this business”.
Mike Hazell, Saga’s group CEO, said: “Our cruise and travel businesses have had an outstanding year, having taken around 120,000 passengers on holiday, with customers continuing to be drawn to the strength of the Saga brand and offer.
“In delivering my first update as group CEO, it is clear that Saga is a business with strong fundamentals in place, underpinned by an outstanding brand, brilliant colleagues, loyal customers and an opportunity to drive long-term sustainable growth, as we unlock value through optimising our core businesses and reducing debt.”