Saga Plc’s share price rallies after a positive trading update

Saga Plc’s share price LON:SAGA rallied by +4.80% as its trading update shows it’s travelling in the right direction.

Saga, the specialist provider of travel and insurance services to the over 50s, is making waves not just with its cruise ships but also with its financial strategy.

In its trading update, published this morning, the company outlined a clear plan to address the challenges it faces, reduce its debt levels, and position itself for future growth.

Saga expects to report an underlying profit before tax that’s ahead of last year and above previous guidance, a reassuring sign of stability.

The star performers? The Ocean and River Cruise businesses.

Ocean Cruises achieved a 91.0% load factor, up from 88.0% last year, with passengers spending an average of £358 per day.

A jump of  + 8.0% over the previous spending figures.

River Cruises also saw growth, with a load factor of 89% and a +15.0% jump in daily spending to £327.

These figures highlight Saga’s ability to tap into the growing appetite for premium travel experiences among its target demographic and the power of the grey pound

The Travel division is also pulling its weight, with revenue up +15.0% and passenger numbers climbing by +9.0%.

Profits in this segment are set to hit high single-digit millions, significantly better than the £1.5m reported last year. Revenues, and passenger numbers, in the division are growing at +15.0% and 9.0% respectively.

However, the Insurance Broking business is facing headwinds, with policy sales down -15.0%.

Saga isn’t standing still here, instead, they are preparing to transfer their motor and home insurance operations to Ageas, in late 2025, a move that should streamline operations and improve efficiency at the group.

Additionally, the sale of their underwriting arm, Acromas Insurance Company Limited, is expected to close in Q2 2025 and generate £4.3.0m in proceeds, which should help to reduce debt further and take it below the £614.60 million, reported in July 2024.

Speaking of debt, Saga has successfully refinanced its corporate facilities at a blended interest rate of around 7.60%.

With net debt already falling and expected to decline further in 2025/26, Saga is focused on strengthening its financial position while continuing to invest in growth areas of Cruising and Travel.

For investors, the trading update points to a company that is trying to balance its short-term challenges against the long-term opportunities it has.

The market seems to share that view with the stock price up by +4.80% today as a result. That said Saga shares have fallen by -79.0% over the last 5-years so there is plenty of work still to do.