Saga (LON: SAGA) will show a sharp downturn in profit this year. More significant will be whether Saga, which offers insurance and other services to the over 50s, can show any progress in trying to turn around this disappointing performance at its AGM on Wednesday.
Saga reported a large loss last year. Even if underlying pre-tax profit is used then there was still a decline and that will accelerate this year.
The share price has fallen by three-quarters in little more than three months.
Management needs to show that the company can bounce back. The key to the future is attracting customers and keeping them. This is particularly true of the insurance business.
A new fixed-price insurance product was launched in April and an advertising campaign has been launched.
This is part of the focus on direct business. There will have been ten weeks of sales by the time of the AGM. Initial sales appeared positive, but it will be interesting to see if this has continued.
There could be more news about the savings link-up with the Marcus brand of Goldman Sachs. The new long-term savings products will be launched in the autumn but there could be more news about this link and other potential savings partners.
Saga’s first ever purpose-built cruise ship is undergoing trials. The British-registered Spirit of Discovery should be going to sea this month with her maiden voyage on 10 July.
Another cruise ship, called Spirit of Adventure, should be delivered next summer.
In a full year each cruise ship could achieve EBITDA of £40m. There may be news of bookings for the first ship, which can hold 999 passengers.
The chief executive Lance Batchelor has already said that he will leave at the beginning of 2020. This should complete the main board changes of the past year.
The benefits of the restructuring and new products will not show through this year. In the year to January 2020, gross written premiums are expected to dip from £748.7m to £740.7m and underlying pre-tax profit slump from £180.3m to around £100m.
The shares are trading on little more than five times prospective earnings. However, it may be wise to follow progress before buying.