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Saga sees profits in line with guidance; cites tough insurance, travel markets

Tue, 28th Jan 2020

Over-50s focused services group Saga said it expected its annual underlying profit performance to be in line with previous guidance 'against a challenging external environment' in the insurance and travel markets. Saga-branded home and motor policies for the year through January were expected to fall around 3% on-year, reflecting 'a highly competitive market and a disciplined approach to new business'. Home and motor margins were expected to be at the higher end of Saga's £71-to-£74 range, reflecting the lower new business strain. Like other insurers, Saga said it was seeing higher inflation on third-party damage and theft costs, with overall inflation running at around 7% compared to longer-term expectations of around 5%. 'This trend is not expected to have a significant impact on the current year but will have a modest adverse impact on future year margins if retail pricing conditions remain competitive,' the company said. Forward bookings in the cruise division for the 2020/21 year were at 76% of annual target levels. Saga said the division remained on track with expectations for £40m of EBITDA per new ship. For tour operators, however, revenues were expected to be down around 5%, in line with trading at the half year. 'We are seeing a much more resilient picture in those parts of the business where our customer proposition is truly differentiated, notably in escorted tours,' Saga said. The administration of Thomas Cook in the second half had resulted in about £4m of one-off costs, to taken below underlying pre-tax profit. Story provided by StockMarketWire.com

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