The over-50s specialist's debt-cutting turnaround accelerated, with cruise demand and an Ageas insurance tie-up driving a sharp profit jump.
Saga (LSE: SAGA) shares rallied 12% after the over-50s travel and insurance group reported first-half underlying pre-tax profit of £46.6m, up 98% year-on-year, on revenue up 14% to £366.3m for the six months to 31 July.
The rally was driven by confidence that Saga will now hit its medium-term financial targets well ahead of schedule, after the company cut net debt by more than £70m since January to £429m, bringing leverage down to 2.7 times from 4.3 times a year earlier.
Growth was broad-based across the group, led by the travel arm, where profit rose 45% on strong demand for ocean and river cruises and the relaunch of holidays to China. The insurance business grew profit 75% after Saga moved its motor and home cover to a partnership with Ageas, with a pet insurance tie-up with Allianz now in the pipeline.
Statutory pre-tax profit from continuing operations jumped from £3.7m to £28.0m, aided by lower exceptional costs, while a savings partnership with NatWest Boxed has pulled in more than £2bn of deposits since December. Saga's long-anticipated stock market debut nearly a decade ago failed to live up to expectations amid insurance underperformance, pandemic disruption and persistent debt concerns.
Saga now expects to reach its medium-term targets, including £100m of underlying profit and leverage below two times, ahead of the original January 2030 goal, and has upgraded full-year guidance to underlying pre-tax profit of £65m to £70m, materially ahead of last year.
This report is based on Saga’s announcement and coverage by UK Investor Magazine. Company announcements can be tracked via London Stock Exchange RNS and Investegate, and the full markets calendar is worth watching for the next update.
This article is for general information only and does not constitute investment advice or a recommendation to buy or sell any security. Photo: Alonso Reyes on Unsplash.
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