Saga said first-half profit nearly doubled and raised its guidance, as the over-50s travel and insurance specialist’s turnaround gathered pace.
The company’s IPO nearly a decade ago was highly anticipated, but the group has never really lived up to expectations, having been ravaged by poor performance of its insurance business, the pandemic and concerns about debt.
But let’s not take anything away from today’s update. The company reported underlying pre-tax profit of £46.6m for the six months to 31 July, up 98%, on revenue up 14% to £366.3m.
Statutory pre-tax profit from continuing operations jumped from £3.7m to £28.0m, helped by lower exceptional costs. Growth came across all its businesses, led by its travel arm, where cruises and holidays grew strongly.
Crucially for a company that has long carried heavy debt, Saga cut its net debt by more than £70m since January to £429m, bringing its leverage ratio down to 2.7 times from 4.3 times a year earlier.
It said it now expects to reach its medium-term targets, including £100m of underlying profit and leverage below two times, ahead of the original January 2030 date.
These targets will be behind today’s 12% rally.
Saga’s travel business grew profit 45%, with strong demand for its ocean and river cruises, and it relaunched holidays to China. Its insurance arm grew profit 75% as it moved its motor and home cover to a partnership with Ageas, and it is preparing to launch pet insurance with Allianz. A new savings partnership with NatWest Boxed has attracted more than £2bn of deposits since December.
On the back of the strong start, Saga upgraded its full-year guidance, now expecting underlying pre-tax profit of £65m to £70m, materially ahead of last year.