Saga blames Brexit for profits slump
Over 50s travel and insurance specialist Saga remains upbeat about its travel business despite a 52% drop in its group revenue from £109.7 million in the first half of last year to £52.6 million in the first six months of 2019.
The company blamed weaker demand due to Brexit for the fall in travel revenue, saying the uncertainty had led to lower demand in the over 50s market, which had triggered a higher level of discounting across the industry.
Saga’s underlying tour operating pre-tax profit halved to £4.2 million in the six months to the end of July while forward tour operator sales have slumped almost 9% to 157,400 for 2019/20 and by 9.6% to 43,000 for 2020/21.
Meanwhile its cruise business made an underlying loss of £3.4 million for the first six months, compared to a £4.7 million profit in the first half of 2018.
Saga put this down to the sale of Saga Pearl II leading to a short term drop in revenue, as well as launch costs for Spirit of Discovery, the first of two new ships.
However, announcing its results today, Saga said it had fully achieved its cruise revenue targets for 2019/20. The company took delivery of Spirit of Discovery, this summer and it will receive a second ship, Spirit of Adventure, next year.
"We have now achieved the full year revenue and booking targets for 2019/20, with forward bookings of over 50% of our sales target for 2020/21. This underpins our ambitious plans for £40 million of EBITDA per annum from each new ship," it said.
Saga intends to build on its membership, increasing regional availability and its digital experience. Members booked 3,500 cruises in the first half, 65% of which were to first time cruisers with Saga.
Chief executive Lance Batchelor said: " Spirit of Discovery is now fully operational, delighting customers, and delivering on our targets for filling additional cruise capacity into next year.
"In Tour Operations we are adapting to a challenging market by building on differentiated tours and river cruise. Our membership programme is starting to prove effective in helping us develop a deeper relationship with, and sell multiple products to, our members."
Saga said continues to forecast underlying profit for the full year of between £105 million and £120 million.
Linsey McNeill
Editor Linsey McNeill has been writing about travel for more than three decades. Bylines include The Times, Telegraph, Observer, Guardian and Which? plus the South China Morning Post. She also shares insider tips on thetraveljournalist.co.uk
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