Saga earnings are ‘well ahead’ of last year as over-50s welcome recovery in cruise and travel demand
- Saga’s ocean cruise division had a 79% occupancy rate for the 2023/24 season
- It believes that the travel segment will make an underlying full-year pre-tax profit
- The company said its insurance brokerage business continues to be hit by a ‘challenging market’
Saga forecasts 2023 earnings to be “well above” year-on-year, following an ongoing recovery in the cruise and travel business.
The easing of travel restrictions and the widespread rollout of Covid-19 vaccines have seen the over-50s trade boom over the past two years.
Saga told investors on Tuesday that the travel division’s booked revenue for the 2023/24 season totaled £150m as of last Sunday, up 37 per cent from the same time last year, mainly due to a rebound in demand for tour programs.
Recovery: The easing of travel restrictions and the widespread rollout of Covid-19 vaccines have helped Saga deliver a massive trade revival over the past two years
The Kent-based company is therefore confident that the segment will return to an underlying pre-tax profit for the full year, as previously forecast.
Meanwhile, the group said its ocean cruise business had an occupancy rate — the share of available seats filled with passengers — of 79 percent, up seven percentage points from 2022.
Euan Sutherland, chief executive of Saga, said: “Four months after the close of the fiscal year, we have continued to build on the momentum in our cruise and travel business while making further progress on our growth agenda through the development of our newer activities.
“Underlying profit at the end of the year is expected to be well above last year.”
However, Saga warned that its brokerage business faces a “challenging market,” with policy sales down 6 percent year-on-year, partly due to difficulties in the auto and residential sectors.
In January 2022, the Financial Conduct Authority introduced new rules prohibiting car and home insurers from offering cheaper premiums to new customers and charging more to renewing customers, a practice known as ‘price walking’.
Auto insurers have also faced rising costs due to a shortage of microchips, limiting new car production and driving up used car prices.
In addition, car repairs have become more expensive due to rising energy bills, increased demand for replacement cars and a lack of technicians.
But while Saga’s performance in these two sectors has struggled, it reported that private health insurance revenues rose 16 percent.
Record numbers of Britons are using private healthcare as a result of huge NHS waiting lists created after millions of surgeries were postponed at the height of the Covid-19 pandemic.
Saga announced on Tuesday that it has entered into a partnership with Bupa, which it says will “not only enhance our current proposition, but also provide exciting new opportunities for a digital health and wellness offering for our customers.”
Saga Shares were up 2 percent at 133p this morning, but they remain more than a third lower than they were three years ago and are down about 92 percent over the past five years.