Saga returns to profit as cruise demand boosts first-half results, debt reduction remains priority
Travel arm drives rebound to pre-tax profit; financing costs weigh on margins; company targets £100m underlying PBT by 2030 with leverage below 2x
Saga said in a trading update that it had returned to pre-tax profit in the six months to 31 July, supported by renewed demand for cruises and holidays among its over-50s customer base. Pre-tax profits from continuing operations came in at £3.7 million, compared with a £116.9 million loss for the same period a year earlier. Higher financing costs reduced underlying pre-tax profit by 5%, to £23.5 million.
The results gave Saga confidence that profits for the financial year would be in line with the prior-year period. The group’s underlying revenue rose 7% to £320.5 million.
The travel arm posted a 33% rise in profit to £41.6 million as forward bookings for ocean and river cruises and holidays for the rest of the year remained robust. The group’s insurance broking arm, by contrast, posted a profit of £9.1 million, down from £11.7 million a year earlier.
Saga's net debt stood at £515.1 million at the end of the period, down from £617.2 million a year earlier. The group said debt reduction remains a key priority and, helped by the first-half progress, the full-year leverage ratio is now expected to be below the prior year.
Looking ahead, Saga said it has made operational progress and now has in place strong foundations to achieve its long-term growth ambitions. It remains confident in achieving underlying profit before tax of at least £100 million by January 2030, with leverage falling to below 2.0x in the same period.
Mike Hazell, Saga’s chief executive, said the travel arm performed “particularly strongly” and that the results underline the momentum as the group continues to deliver its financial and operational objectives.
Mark Crouch, a market analyst for eToro, said the long-term ambition to deliver £100 million in profit by 2030 is bold. 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.”
Saga is doubling down on its profitable core travel business, while also restructuring its insurance and money arms via new partnerships.
The group is focusing on its core travel business and is pursuing partnerships to strengthen its insurance and financial services arms as part of a broader turnaround. Shares rose 2.3% or 5.00p to 222.00p on Wednesday, having surged more than 100% over the past year, as investors digested the improved profit trajectory and debt-reduction progress.
