Saga Returns to Profit Amid Rise in Cruise Demand

Saga has marked a significant turnaround by returning to profit for the first time since 2018, reporting a £2.1 million statutory pre-tax profit for the year ending January, following a notable loss of £160.2 million the previous year. This recovery has been driven largely by a resurgence in demand for cruises, particularly among its target demographic of individuals aged over 50.

Mike Hazell, Saga’s chief executive since late 2023, has overseen a comprehensive restructuring of the business. Key changes included the sale of its insurance underwriting division to Belgian company Ageas, which has established a 20-year partnership with Saga to provide home and motor insurance services. The streamlining of travel operations into a single management structure has also contributed to improved performance across the company.

The travel division, which encompasses both ocean and river cruises, has delivered a remarkable increase in underlying profits, rising by 37 per cent to £87.2 million on revenues of £504.1 million, representing an 11 per cent increase. The performance of the insurance broking segment surpassed expectations, with profits climbing by 17 per cent to £16.9 million, alleviating concerns regarding the disruptions caused by the reorganisation.

Following years of significant losses, which have totalled over £1 billion since 2018, Saga’s return to profitability is a notable development in its corporate narrative. The company, founded in 1951, encountered substantial financial challenges, particularly during the COVID-19 pandemic which severely affected its travel business. Hazell’s leadership is viewed as a pivotal factor in steering the company back towards stability.

Investors reacted positively to the announcement, pushing Saga’s shares up by 6 per cent to 617 pence, raising the market capitalisation to approximately £890 million. This valuation remains considerably lower than the £2.1 billion valuation set during its initial public offering 12 years ago.

Looking ahead, the firm expressed confidence in achieving its target of generating at least £100 million in operating profits by January 2030. Analysts at Peel Hunt have indicated that Saga is in the midst of a transformative process, having reduced its exposure to insurance underwriting, which may lead to potential growth in the near future.