Just two months since Saga (SAGA) warned on profits, citing low margins in its insurance business, management has spooked investors again by reporting a “very competitive” travel market. The latest announcement, released ahead of its annual meeting, did not make changes to expectations for the full year, but wiped a tenth off the over-50s travel and insurance specialist's market value.
Brexit-related political uncertainties have affected bookings for UK-listed travel companies already this year, and Saga warned it was “not immune”. Booked revenues were down 4 per cent on last year at 15 June, while competition has eaten away at margins. The cruise business has remained on track, but expects to report an operating loss of around £3m at the half-year, as it sold one ship and launched another.
Efforts to move the insurance division back to higher-margin direct business (rather than through comparison websites) are showing signs of progress. Roughly 60 per cent of the group’s new home and motor insurance business is coming direct – compared with 50 per cent last year – thanks in part to the launch of three-year fixed-price products, which were taken up by more than half of new customers.
The announcement caps off a disastrous 12 months for the group, which has seen its share price fall more than 70 per cent. Earlier this month, the group announced that chief executive Lance Batchelor would retire in January after six years in the job.
