Saga on course to return to profit as travel picks up

Cruises-to-insurance group Saga said it remained on course to turn an annual profit following a strong start to the year.

The group, which specialises in people aged over 50, said it had made “good progress” during the first five months of 2022.

In travel, Saga said the current year booked load factor as at 2 July was 73%, with the full-year load factor likely to nudge higher to 75%. It also reported a “strong launch” of the 2023/24 cruise season, with the current load factor of 34% ahead of expectations.

Total insurance policy sales were down 2% on the previous year, although travel insurance sales in June were in-line with pre-pandemic levels. Motor and home policies were 9% down on the same period a year previously, due to a decline in new business.

Saga said it now expected underlying pre-tax profits for the year to January 2023 to be in the range of £35m to £50m. The group reported an annual loss of £6.7m in the last year.

The forecast was, however, at the lower end of analyst expectations, and by noon shares in Saga were trading 2% lower at 163.9p.

Euan Sutherland, chief executive, said: “During the first five months of the year, Saga has made good progress in what has been a particularly challenging eternal environment and we are pleased we’re on track to return to an underlying profit for the [current] financial year.

“We have continued to adapt our insurance business to meet the evolving needs of our customers. Meanwhile, our travel business is continuing to make progress as we emerge from the pandemic.”

Saga also announced on Tuesday that ITV chair Peter Bazalgette would join the board as senior independent non-executive director, while Gemma Godfrey – a former advisor on Apprentice USA – will chair the separate Saga Personal Finance board. Bazalgette will replace current SID Orna NiChionna when she steps down in September.

The group also announced changes to the executive team, with Jerry Toher leaving mutual Royal London to become chief executive of Saga Personal Finance, and Aaron Asadi named chief executive of Saga Media.

Sutherland said: “Over the past two years we have established the business and are now moving to focus on growth, based on our successful brand relaunch.”

Russ Mould, investor director at AJ Bell, said: “A drop in new business dragged total policy sales down, as Saga also chose to defend its margins.

"Nevertheless, Sutherland’s steer for underlying pre-tax profit for the year lies toward the low end of analyst 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.”