Saga reports solid growth in several key sectors

(Sharecast News) - Over-50s specialist Saga reported impressive growth in several key sectors in the first four months of its financial year on Tuesday. The London-listed company said the ongoing sale of its insurance underwriting business aligned with its goal to reduce debt and transition to a more capital-light model.

Its cruise division was continuing to gain momentum, with positive performance indicators for the 2023-2024 season.

As at 18 June, the booked ocean cruise load factor stood at an impressive 79% - seven percentage points higher than the same period last year.

The per diem, at £338, was a solid increase of 6% compared to 2022.

Saga projected a full-year load factor in line with previous guidance, aiming for at least 80%, as it remained on track to achieve £40m EBITDA per ship, excluding overheads.

The expected seasonality during late summer would contribute to a weighted performance in the second half.

Saga said it experienced record-breaking success with the launch of the 2024-2025 ocean cruise season, having already secured a booked load factor of 34% and a per diem of £342 as at 18 June.

The booked load factor for river cruises in 2023-2024 was at a robust 74%, with a per diem of £293.

That equated to revenue of £39m, demonstrating a 37% increase compared to the same period in the prior year.

Saga's travel division, meanwhile, showcased substantial growth with booked revenue for 2023-2024, reaching £150m as at 18 June.

That, the board said, represented a 37% increase compared to the same period in 2022, primarily driven by an uplift in touring.

The travel division remained on track to achieve an underlying profit before tax for the second half and full year, in line with previous guidance.

Saga said it was meanwhile facing a challenging market environment in the insurance broking sector, with total policy sales across all products for the four months ended 31 May lagging 6% behind the prior year.

However, travel insurance sales exhibited strong growth during the same period, with policies up 6% and revenue up 22% compared to the previous year.

Private medical insurance (PMI) also performed well, with a revenue growth of 16% compared to the prior year, despite a relatively stable policy count.

Saga announced a new partnership with Bupa to further enhance its PMI product, offering improved services and potential digital health and wellbeing opportunities for customers.

In the motor and home insurance sectors, policy sales were 7% lower than the prior year during the four-month period.

However, customer retention remained robust at 85%, up from 83% last year, while the margin per policy stood at £56, reflecting the market-wide inflationary environment.

Saga said it expected the margin to be around £55 for the first half, before returning to around £60 over the medium term, consistent with previous guidance.

The company said it was making progress in managing its debt and improving liquidity, reporting that In the current financial year, it had repaid a further £15.8m of ocean cruise ship debt.

As at 31 May, available cash stood at £149.5m.

Saga said it remained committed to its expansion plan, poised for another year of revenue and underlying profit growth.

It said Saga Money was set to launch a series of new products in the second half, aiming to provide enhanced financial solutions for its customers.

Saga Exceptional, through Saga Media, had meanwhile surpassed expectations with remarkable audience numbers, receiving more than 2.5 million visits since its launch in late January.

Additionally, Saga said it was planning the introduction of Saga Spaces in July - a subscription-based online platform offering customers social interaction and online services.

Initially focusing on health and wellbeing, Saga Spaces would include classes, health advice, and round-the-clock access to general practitioners.

The company continued to enhance its data capabilities, prioritising improved customer consent and contactability across the group.

"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," said chief executive officer Euan Sutherland.

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

"We have taken strong bookings for our ocean cruises with a load factor that is ahead of the same point in the prior year, and our river cruise and travel businesses are on track to return to profitability in line with previous guidance."

In insurance, Sutherland said market conditions - particularly in motor - continued to weigh on the group result.

"We have secured a valuable partnership with Bupa that will not only improve our current private medical offering but also open up exciting new opportunities, and we plan to launch our new pet insurance later in the year.

"Meanwhile, we are also continuing with the sale process of our insurance underwriting business."

Euan Sutherland said Saga was developing a series of new products in Saga Money and preparing for the July launch of Saga Spaces, its new subscription-based online platform that would offer social interaction and a series of online services.

"At the same time, we have continued to develop Saga Media, which is performing ahead of expectations, and have made good progress in our data and digital strategy."

At 0840 BST, shares in Saga were up 3.83% at 135.4p.

Reporting by Josh White for Sharecast.com.