- Saga says ‘reducing debt remains a key priority for the group’
Strong demand for cruises and holidays helped boost Saga return to a pre-tax profits in the first half after slumping to a major loss last year.
Pre-tax profits from continuing operations came at £3.7million for the six months to 31 July, compared to a loss of £116.9million over the same period last year.
Higher financing costs reduced underlying pre-tax profits by 5 per cent to £23.5million.
However, the over-50s holiday, cruise and insurance provider said its performance during the period gave it confidence that profits for the financial year would be in line with the previous period.
The company’s travel arm posted a 33 per cent increase in profit to £41.6million, amid strong forward bookings for ocean and river cruises and holidays for the rest of the year.
But across the firm’s insurance broking arm, profit for the period came in at £9.1million, down from £11.7million at the same point a year ago.
Saga’s group underlying revenue reached £320.5million, up 7 per cent compared to a year ago.
Demand: Strong demand for cruises and holidays helped boost Saga’s performance in the first half
Its net debt was £515.1million by the end of the period, against £617.2million a year earlier.
On debt, the firm said: ‘Reducing debt remains a key priority for the Group and following the strong progress in the first half, the full-year leverage ratio is now expected to be below the prior year.’
Looking ahead, Saga said: ‘The Group has made clear operational progress and now has in place strong foundations to achieve our long-term growth ambitions. As such, we remain confident in achieving Underlying Profit Before Tax of at least £100million by January 2030, with leverage falling to below 2.0x in the same period.’
Saga shares rose 2.3 per cent or 5.00p to 222.00p on Wednesday, having surged over 107 per cent in the past year.
Mike Hazell, chief executive of Saga, said the company’s travel arm performed ‘particularly strongly.’
He added: ‘These are strong results that underline the momentum we have as we continue to deliver our financial and operational objectives.’
The group is doubling down on its profitable core travel business, while also restructuring its insurance and money arms via new partnerships.
Mark Crouch, a market analyst for eToro, said: ‘The long-term ambition to deliver £100million in profit by 2030 is a bold one.
‘Investors will rightly ask whether the pace is brisk enough to justify patience, especially with debt still casting a long shadow over the balance sheet.
‘Financing costs may have taken a bite out of interim profits, but the real question is how efficiently Saga can turn strong bookings into consistent cash flow.’
He added: ‘Saga isn’t quite sailing off into the sunset just yet, but the tide has clearly turned. For now, it looks like older travellers aren’t the only ones bucking economic gloom.’
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