Thursday 19 September 2019 8:16 am

Saga profits slump as travel business wanes

Saga posted a sharp fall in profits during the first half of this year, as challenges in its travel business dragged down the over-50s tourism and insurance giant.

Pre-tax profits at the firm tumbled year-on-year by more than 50 per cent from £109.7m to £52.8m.

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The interim dividend fell 1.7p to 1.3p.

Full year guidance for underlying profit before tax is expected to be between £105m and £120m, remaining unchanged.

Uncertainty over Brexit has dented consumer appetite for travelling, according to Saga.

Group chief executive Lance Batchelor told City A.M. that “in tour operations and land base holidays, the industry is under a lot of pressure”.

He added: “The loss of confidence with Brexit is overshadowing everything on tour operations.”

Saga, which provides escorted tours, river and ocean cruises along with motor and home insurance, said the fall in profits was due to “lower reserve releases from the in-house underwriter, AICL, lower margins in the retail broking business and the short-term impact of the retirement of the Saga Pearl cruise ship in the first half of the year”.

Batchelor said: “We have made good progress against our strategic reset. The sales of our 3-year fixed price insurance are encouraging, and a higher proportion of customers are coming to us direct. Spirit of Discovery is now fully operational, delighting customers, and delivering on our targets for filling additional cruise capacity into next year.”

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Batchelor, who is set to step down early next year, added: “We are pursuing a number of initiatives to further improve the performance of our insurance business.”

The firm launched a cruise ship earlier this year which it said has already sold out for this year, and is preparing to roll out a new cruise in August next year.