The UK-based Saga PLC (GB:SAGA) expects higher revenues and profits for the full fiscal year as the company continues its journey towards recovery. The company published its first-half earnings report yesterday for the six months ended on July 31, with 15% growth in its revenues. Further, it expects full-year numbers to be ahead of market expectations.
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The company also announced that it has halted the potential sale of its underwriting business as it sees an opportunity to generate greater value when market conditions improve.
Saga is a British company with a specific focus on providing products and services tailored to individuals aged 50 and above. The company operates in various divisions, including insurance and travel, personal finance, media, and more.
Continued Travel Momentum
In its interim results, the company posted a notable 15% growth in its revenues, reaching £355.3 million compared to £309.8 million reported in the previous year. The company showed a significant improvement of 70% from the £261.8 million loss before tax reported in the previous year to a loss of £77.8 million.
The company’s numbers benefited from its performance in the cruise and travel business. The lifting of travel restrictions has resulted in a significant resurgence in seniors booking overseas trips over the past two years. The customers in its travel division surged by 25%, reaching approximately 25,700. The company’s river and ocean cruise operations both returned to a first-half underlying profit after achieving a passenger load factor of 83%.
Moving ahead, the company is expecting to deliver double-digit growth in its revenue and underlying profit before tax for the full year. However, it also anticipates that the motor insurance business will generate less profits due to challenging market conditions, including higher claims inflation and rising repair costs.
Saga PLC Share Price
The results triggered a negative response from investors, resulting in a 3.27% decline in the share price by the close of yesterday’s trading session. Year-to-date, the stock has been trading down by 14%.
Over a longer period of five years, the shares have lost more than 90% of their value in trading. The COVID-19 pandemic underscored the vulnerability of Saga’s business model in the face of an unexpected decline in travel demand. The company remains exposed to abrupt downturns in the travel market, which continue to pose a significant risk to its shares. The long-term success of Saga shares depends on sustained business recovery and significant debt reduction.
