Saga (LSE:SAGA) reported a strong set of results, with underlying revenue rising 11% to £654.6 million and trading EBITDA up 16%. Underlying profit before tax increased 19% to £44.2 million, while the group returned to statutory profitability with a £2.1 million profit. Performance was driven by solid contributions from both its Travel and Insurance divisions. The company also significantly improved cash generation, reducing net debt by 16% to £499.5 million and lowering leverage to 3.7x, keeping it on track to meet its long-term targets through to 2030.
During the period, Saga completed a refinancing of its corporate debt through a long-term facility and sold its Insurance Underwriting business to Ageas. It also introduced a new partnership model for motor and home insurance, removing underwriting exposure and simplifying its broking operations. Operationally, the group aligned leadership across its Cruise and Holidays businesses, expanded its river cruise offering, and strengthened its partnerships through new financial products and publishing initiatives. Management expects further improvements in profit and cash flow over 2026/27 as the Ageas partnership becomes fully integrated and leverage continues to decline.
Forward bookings in both ocean and river cruises remain strong, while the group noted limited direct exposure to geopolitical tensions in the Middle East and confirmed that near-term foreign exchange and fuel costs are fully hedged. Saga reiterated its confidence in delivering at least £100 million in annual underlying profit before tax and reducing leverage to below two times by January 2030, supported by its repositioned, lower-risk business model focused on the over-50s demographic.
From an investment standpoint, the outlook reflects improving operational momentum, positive technical signals, and meaningful progress in reducing debt. However, these gains are balanced by structurally weak profitability in reported figures and still-elevated leverage levels. Valuation remains less compelling due to the negative price-to-earnings profile and the absence of a dividend yield.
More about Saga plc
Saga plc is a UK-based provider of travel, insurance, and financial services tailored to customers aged over 50. Its operations span ocean and river cruises, holiday packages, and motor and home insurance products, increasingly delivered through partnership models. The company focuses on offering premium, tailored experiences and services to its core demographic, supported by strong brand recognition and customer loyalty.
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