Saga Group plc, the UK based listed financial services to travel group that caters for those over the age of 50, has booked a deep loss for 12 months to 31 January 2019 on issues at its insurance business, but its cruise sales remain on track with projections.
"Over recent years Saga has faced increasing challenges from the commoditisation of the markets in which we operate, especially in Insurance. This has had an impact on both customer numbers and profitability,” CEO Lance Bachelor said in a statement. We proved in 2018 that our Cruise strategy is working and we will accelerate our efforts in Tour Operations to match the progress we've made in Cruise,” he added.
Group revenues increased by 2.2% to £841.5 million, but Saga booked a net loss of £134.6 million compared to a profit of £139.4 million in previous financial ywar due to a 3310 million impairment charge it booked in its 2018 accounts.
The groups two ship cruise operation increased revenues by 9.5% to £96.6 million in 2018-19 and its underlying profit increased by 2.4% to £6.9 million.
The cruise business delivered a 9.5% increase in revenue to £96.6 million, reflecting an increase in passenger days of 11,000 including fewer maintenance days and an increase in per diems as demand for Saga Pearl II in her final year was higher than expected. There were no scheduled maintenance days in the year compared with 19 days of maintenance on the Saga Pearl II and 20 days of maintenance on the Saga Sapphire in the prior year.
Revenue per diem improvements £262 from £249 in 2017-18 have offset £2 million of additional fuel costs, net of fuel hedges, arising from higher market prices in the year. The increased marketing spend was expected and supports demand for the new ships. This was offset by cost savings from operational efficiencies.
“We have seen the extraordinarily rapid build, to schedule, of Spirit of Discovery, our first ever purpose built cruise ship during 2018. Spirit of Discovery will carry her first passengers in July 2019. Our second new ship, Spirit of Adventure, is due to be delivered in summer 2020. Forward bookings for both ships are on track. They are each expected to deliver c.£40m EBITDA per annum. This will be transformational for the future profit trajectory of our Travel business,” Bachelor stated.
“Our strategy in Tour Operations will be to accelerate our move away from undifferentiated, low value products, such as short haul, to higher value, more differentiated segments such as escorted tours, third party cruises and river cruises,” Bachelor said.
“We are starting to renew our river ship fleet, and have recently ordered two purpose built vessels on long-term lease agreements. While we do not expect significant growth in Tour Operating revenues, this forward transformation is expected to lead to improved margins in the next few years,” he noted.
