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Saga eyes pent-up cruise demand from vaccinated over-50s

Henry Saker-Clark, PA City Reporter
·2-min read

Over-50s insurance and cruise giant Saga has hailed “significant pent-up demand” from vaccinated customers to travel again as it posted a heavy slump in profits for the past year.

Shares in the company soared in early trading on Wednesday as bosses at the business struck an upbeat tone despite sliding profits.

It told investors that underlying pre-tax profits plummeted by 84.4% to £17.1 million for the year to January 31.

The company said it also saw a reduction in the value of its travel assets due to the impact of Covid-19, which would have dragged it to a loss for the year.

It came as revenues dived by 57.7% to £337.6 million, primarily due to the suspension of travel operations from March last year.

The group also reported lower retail broking revenues as the pandemic weighed on travel insurance.

However, Saga said it is ready to restart its tour operations and cruise business later this year when it is given the green light by Government.

Group chief executive officer Euan Sutherland said the company expects “high levels” of customer retention in its cruise business when restrictions are lifted.

He said: “Looking ahead, while we are mindful of economic headwinds and the potential ongoing impacts of Covid-19, it is clear that there is significant pent-up demand among our customer base, the vast majority of whom have now been vaccinated and are ready to enjoy post-lockdown freedom.

“Saga is a proud British business, with a strong brand, loyal customers and great people, and we are excited about the opportunities ahead.

“We look forward to relaunching our brand later in 2021, which will only enhance our ability to unlock the potential in Saga, returning the business to sustainable growth and creating significant long-term value for all our investors and stakeholders.”

William Ryder, equity analyst at Hargreaves Lansdown, said: “We wouldn’t say Saga is a coiled spring just waiting to bounce back – but there are some more upbeat signs across parts of the business.

“The insurance divisions are doing reasonably well, and reduced driving this year has done wonders for travel claims and underwriting margins.

“What’s more, customer retention in the travel division seems to be strong, which bodes well for a recovery later this year if the vaccine rollout continues to be as effective as hoped.”

Shares in Saga were 10.8% higher at 386.2p in early trading on Wednesday.