Over-50s travel and insurance group Saga has announced a significant return to profitability, reporting pre-tax profits of £2.1 million for the year ending January 31. This marks a dramatic turnaround from the previous year's losses of £160.2 million, with the company forecasting further earnings growth ahead.
Strong Financial Performance and Share Surge
The group's shares leaped more than 10% higher on Wednesday following the positive financial results. On an underlying basis, profits jumped 19% to £44.2 million, largely driven by a 31% surge in travel earnings to £14 million. This robust performance comes despite wider sector disruptions, including the Iran war, which Saga has managed to shrug off effectively.
Minimal Impact from Middle East Conflict
Saga reported limited impact from the Middle East conflict on its travel operations. The company has no cruise ship itineraries and only limited holiday bookings to Egypt, Cyprus, and Turkey in the affected region. It cancelled package holiday trips to Jordan, affecting fewer than 500 customers, but overall bookings have remained robust since the war began in late February.
Chief executive Mike Hazell stated to the Press Association that he is "not concerned about what we're seeing" regarding any effect on bookings, adding that the overall impact for the group is "small." He noted that approximately 75% of the holiday programme for the year is already booked, providing a strong foundation for continued growth.
Strategic Hedging and Market Focus
The group has implemented strategic measures to mitigate risks, including being 100% hedged for fuel costs through next March and 75% hedged to the end of 2027. Saga's focus on the over-50s market has paid off, with passenger numbers rising by 11% in the past financial year. The company has also consolidated all travel divisions—ocean cruises, river cruises, and package holidays—under a single leadership team to enhance operational efficiency.
Confidence in Future Growth
Saga expressed confidence in driving continued success in its travel business, stating, "While mindful of the current uncertainty in the Middle East, we have minimal exposure to the region." The group aims to boost underlying annual profits to at least £100 million by January 2030, reflecting a long-term growth strategy.
Expansion and Historical Roots
In a move to diversify offerings, Saga has recently relaunched holidays in the UK, featuring trips to historical cities such as Canterbury, Chichester, and Falmouth. Chairman Sir Roger De Haan, whose parents founded Saga in 1951, highlighted that travel is now the largest profit generator for the group. He credited operational improvements and management restructuring for increased customer numbers and satisfaction.
Sir Roger added, "It is excellent that, after a number of years, we have started offering holidays in the UK again, the place our journey began 75 years ago." This expansion underscores Saga's commitment to leveraging its heritage while adapting to market demands.
