The cruise boom is helping Saga’s profits compound weak performance in its insurance business
Saga said profits would double as retired and wealthy Britons booked cruises, offsetting weak performance in its insurance business.
The company said it expects profits to reach at least £43 million for the year to the end of January, compared to the £21.5 million it made the previous year.
Revenue is also expected to grow by 10 to 15 percent compared to the previous year with the return of cruise and river cruises, the company said.
Saga, which specializes in insurance and holidays for the over-50s, has enjoyed a major revival in its travel arm in recent years as it recovers from the pandemic.
“Our cruise and travel business had a fantastic year, carrying approximately 120,000 passengers on vacation, with customers continuing to be attracted to the strength of the Saga brand and offerings,” said Mike Hazel, the company’s CEO and former CFO. Who took over from Ewan Sutherland in November.
On track: Saga said it expects profits to reach at least £43m for the year to the end of January, compared with the £21.5m it made the previous year.
“As a result, these companies will return to profitability, in line with expectations.”
This contrasts with its American competitor, Carnival, which warned yesterday that its profits would be affected when it redirected cruise routes due to the turbulence in the Red Sea. The owner of P&O Cruises said it still has “strong” bookings for the coming months.
The outlook for Saga’s insurance business for the year to January was less cheerful, with the market remaining “challenging”.
The company revealed that policy sales are expected to lag 9 per cent on the previous year, while the customer retention rate is set to reach 81 per cent, compared to the previous 84 per cent.
The insurance sector has suffered in an era of high inflation, which ultimately led to higher prices for home and car payments.
Vehicle insurance companies are greatly impacted by rising claims due to high repair and labor costs and semiconductor shortages which result in higher used vehicle prices.
Additionally, they are prohibited from price walking – giving cheaper premiums to new customers while making loyal customers pay more for renewals.
Involved The Saga rose as much as 7 percent in early morning trading, but was down 2.6 percent, or 3.8 points, at 141.2 points when markets closed.
The trading update comes hot on the heels of speculation that debt-laden Saga may sell parts of the company.
The group said last week that it was “exploring opportunities” for its cruise business, which could even lead to its sale.
Its two flagships, Spirit of Adventure and Spirit of Discovery, cruise across the British Isles, the Mediterranean, the Nordics and the Caribbean, with prices ranging from £1,300 to £15,000.
The company said on Friday it was looking into a “partnership agreement” as it tries to reduce its mounting debt.
Analysts at Peel Hunt said the travel division was “passing a rough patch” but added that the company needed to consider restructuring its insurance business.
Saga was reportedly in talks to sell its underwriting business last year to Open, an Australian insurance company, but the deal failed to cross the line.
(tags for translation) Daily Mail