Saga narrows losses and sees cruise bookings rise

Saga rounded off the past year with another underlying loss and has warned that short-term bookings look set to take a hit following Russia’s invasion of Ukraine.

The Kent-based group reported a pre-tax loss of £23.5million for the year ending 31 January, marking an improvement on the £61.2million loss seen the year before. 

Saga shares fell sharply today and were down 6.06 per cent to 238.60p in early morning trading, having also slumped over 25 per cent in the past year.

The over 50s holiday and insurance company said demand for its tour packages remained below pre-pandemic levels as customers continue to be cautious of travelling abroad, while the war in Ukraine may also reduce travel bookings in the short term.        

Saga said its tour bookings for 2022/23 totalled £132 million pounds, which is 30 per cent lower than see before the pandemic struck. 

However, the group has seen bookings for its cruises over the coming year reach a higher level than before the pandemic, as the unleashing of pent-up demand ramped up sales. The company resumed cruises in June after a more than year-long hiatus.

The travel industry, which had been battered by the pandemic, is starting to recover, but risks of new variants of the coronavirus and the war in Ukraine still pose a threat to the pace of recovery.

Boss Euan Sutherland, said: ‘Looking to the future, I am both confident and excited about the opportunities ahead of us as we emerge stronger from the pandemic than we went in, whilst remaining mindful of the current challenging external environment.’ 

The company, which also sells insurance to over 50-year olds, said it expects the new pricing rules levied by British regulators to reduce its motor and home insurance profits. Last year, it benefited from lower motor insurance payouts.

Saga said it had 1.6million motor and home policies in force at 31 January 2022, marking a 1.4 per cent increase from the same point a year ago. The company said its motor and home gross margin per policy remained stable at £74.

In charge: Euan Sutherland is the boss of over 50s-focused firm Saga

Sophie Lund-Yates, an equity analyst at Hargreaves Lansdown, said: ‘Saga has rounded off the year with an underlying loss, which has disappointed the market alongside a lack of forward guidance. 

‘As drivers have returned to the roads following lockdowns, so too have insurance claims. Together with the hammering faced by Saga’s travel business – including cruise ships which are eye wateringly expensive to run, whether they leave their ports or not – and the result is a disappointing one for the group.

‘Marketing expenses are also rising, compounding the issues. However, this is a necessary evil. Saga has been doing some impressive work on improving its proposition, which has been throwing up results. Saga’s biggest challenge is how to differentiate itself in a world where most people only really care about price when it comes to insurance. 

‘The money the group’s throwing at a brand refresh seems to be bearing some fruit, with customer retention levels moving in the right direction. But before Saga can focus on the future too much, it needs to concentrate efforts on navigating through the current waters of uncertainty.’’