Saga returns to profit on cruise demand, but financing costs weigh interim results
Cruise demand lifts first-half profits as Saga focuses on debt reduction and long-term growth targets
Saga reported a return to pre-tax profit from continuing operations for the six months to 31 July, posting £3.7 million compared with a £116.9 million loss a year earlier. Underlying pre-tax profits were £23.5 million, down 5% due to higher financing costs. Group underlying revenue rose 7% to £320.5 million as demand for cruises and holidays remained robust.
The travel division posted a 33% rise in profit to £41.6 million, supported by strong forward bookings for ocean and river cruises and holidays through the remainder of the year. The insurance broking arm made £9.1 million, down from £11.7 million a year ago. Net debt stood at £515.1 million at 31 July, versus £617.2 million a year earlier.
Saga said reducing debt remains a key priority and the group now expects the leverage ratio for the full year to be below the prior year's level. It also set out a plan to reach underlying profit before tax of at least £100 million by January 2030, with leverage below 2.0x in the same period. Chief executive Mike Hazell said the travel arm performed 'particularly strongly'. Shares rose 2.3% to 222.00p on Wednesday, after gaining more than 107% in the past year.
Analyst Mark Crouch of eToro welcomed the ambition but cautioned that pace will be checked against the burden of debt, saying investors will rightly ask whether the pace is brisk enough to justify patience as financing costs bite. 'The long-term ambition to deliver £100 million in profit by 2030 is a bold one,' he said, adding that turning strong bookings into steady cash flow will be the real test.
Saga said it will double down on its profitable core travel business while restructuring its insurance and money arms via new partnerships. The group is aiming to deliver sustainable growth while bringing debt down in tandem with earnings growth.
The company reiterated its guidance and stressed that execution across its divisions remains central to delivering the 2030 targets. The stock reaction appeared supportive, with the shares trading higher on the day as investors digested the interim results.
