Saga warns of profits dip in current year, reiterates long-term outlook

(Sharecast News) - Travel-to-publishing group Saga posted a jump in annual earnings on Wednesday, but warned the coming year would be "one of transition", leading to weaker profits. The group, a specialist in products and services for the over 50s, said underlying revenues improved 5% in the year to 31 January, to £768.2m.

Revenues rose 4%, at £588.3m, while underlying pre-tax profits from continuing operations strengthened 8% at £37.2m.

Total underlying profits jumped 25% to £47.8m, ahead of guidance.

Saga's travel arm drove the jump in profits, following strong demand for its river and ocean cruises.

During the year, Saga agreed to sell its insurance underwriting business to Belgium's Ageas, with whom it also signed a 20-year insurance broking partnership.

Mike Hazell, chief executive, said: "These achievements materially reduce the risk and complexity of our insurance business going forward, and when combined with our continued strong trading performance, meant that we were able to complete the financing of our long-term corporate debt."

However, looking to current year, Saga acknowledged it would be "one of transition".

"Our travel businesses will deliver further growth, supported by their strong forward bookings position," it said. "Alongside this we will continue to prepare for the sale of our insurance underwriting business and...new partnership arrangement with Ageas.

"A material increase in financing costs will mean that we expect the group to generate an underlying pre-tax profit below that of 2024/25, before returning to growth thereafter."

Hazell added: "I am confident that the plans we have in place will step change our financial performance within the next five years, delivering a business with annual underlying profits of at least £100m."

Saga also announced that following the insurance deals, senior independent director Peter Bazalgette and insurance chief executive Steve Kingshott had stepped down from the board.

Sage said the move reflected the company's "new, simplified business model".

Gareth Hoskin replaces Bazalgette as chair of the nomination committee and senior independent director.

As at 0900 BST, shares in the FTSE All Share stock were up just under 1% at 126.2p.