Saga forecasts earnings to be 'well ahead' of last year

Saga is forecasting 2023 profits will be ‘well ahead’ of last year, following a continued recovery in its cruise and travel businesses.

Loosening travel restrictions and the widespread rollout of Covid-19 vaccines have helped the over-50s specialist achieve a rebound in trade over the past two years.

Saga told investors on Tuesday its travel division’s booked revenue for the 2023/24 season as of last Sunday totalled £150million, a 37 per cent jump on the same time last year, primarily owing to a resurgence in demand for touring programmes.

Recovery: Loosening travel restrictions and the widespread rollout of Covid-19 vaccines have helped Saga achieve a massive rebound in trade over the past two years

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The Kent-based company is therefore confident the segment will return to an underlying pre-tax profit for the full year, as per previous guidance.

Meanwhile, the group said its ocean cruise arm had a load factor – the proportion of available seats filled with passengers – of 79 per cent, seven percentage points higher than in 2022. 

Euan Sutherland, chief executive of Saga, said: ‘Four months into the financial year, we have continued to build on the momentum in our cruise and travel operations, while making further progress in our growth agenda through the development of our newer businesses.

‘Year-end underlying profit is expected to be well ahead of the prior year.’ 

However, Saga cautioned that its insurance broking business faces a ‘challenging market’, with policy sales down 6 per cent on last year due partly to difficulties in the motor and home sector.

In January 2022, the Financial Conduct Authority introduced new rules banning car and home insurers from offering cheaper premiums to new customers while charging more to renewing customers, a practice known as ‘price walking’.

Vehicle insurers have also had to contend with rising costs caused by microchip shortages limiting the production of new cars and boosting secondhand motor prices.

In addition, car repairs have gotten more expensive because of soaring energy bills, higher demand for courtesy cars, and a dearth of technicians.

But while Saga’s performance in these two sectors is struggling, it reported revenues from private medical insurance climbed by 16 per cent.

Record numbers of Britons are using private healthcare due to massive NHS waiting lists that arose after millions of operations were postponed at the height of the Covid-19 pandemic.

Saga announced on Tuesday that it had struck a partnership with Bupa, which it claimed ‘will not only improve our current proposition but also open up exciting new opportunities for a digital health and wellbeing offer for our customers’.

Saga shares were 2 per cent higher at 133p this morning, yet they remain more than a third down on three years ago and have plunged by around 92 per cent in the past five years.