Travel-to-insurance products firm Saga (LON:SAGA) maintained FY27 guidance after delivering a ‘strong start’ to the year. The FTSE 250 company continues to make ‘clear progress’ towards its medium-term targets.
Saga aims to deliver at least £100 million in underlying pre-tax profits and a leverage ratio of below 2 times by January 2030.
Despite the latest evidence its strategic re-set is paying, Saga’s shares drifted lower in early dealings today. Why? Well, the stock had already sailed almost 50% higher year-to-date. This good run, and the absence of additional profit upgrades, proved a catalyst for profit-taking.
Compelling growth Saga
Led by CEO Mike Hazell, Saga offers insurance and other products and services for over-50s. Its offerings range from cruises on board its luxury ships, Spirit of Discovery and Spirit of Adventure, to holidays, insurance and other financial products.
In an update ahead of its annual general meeting (AGM), Saga said it traded in line with expectations for the first four months of the year. Furthermore, it remains on track to deliver its FY27 guidance.
Cruise control
Saga called out ongoing strong trading in its Travel business, with Cruise performing ahead of expectations and a resilient customer base underpinning bookings in Holidays.
For H1, Holidays revenue and passenger numbers are expected to be higher year-on-year. And based on current booking levels, FY27 revenue should be ‘marginally ahead’ of the same point last year.
Saga anticipates passenger numbers could be slightly behind and expects to see a higher proportion of short-haul holidays as a result of the Middle East conflict.
Trading in Insurance Broking remains in line with expectations. Saga said the start of its long-term relationship with Ageas is ‘progressing well’. In fact, thanks to the strong performance-to-date under the motor and home partnership, Saga is about to receive a £10.5 million payment from Ageas following the outperformance of policy volume targets.
Encouraging signs
Hazell commented: ‘Saga has made a strong start to the year, building on the significant growth we achieved last year. Our momentum in Travel has continued, demonstrating the resilience of our customers and our diverse offering, despite the current geopolitical uncertainty.
‘At this early stage of our partnership with Ageas, we are already seeing encouraging signs to support our long-term growth ambitions, and the performance in our wider Insurance business continued to benefit from the more simplified and customer focussed operating model we now have.’
Saga is a business with the wind in its sails. The business has been simplified and returned to bottom line profitability and both divisions are making progress.
Furthermore, net debt continues to reduce, standing at £464.7 million at 31 May 2026. That was £104.8 million lower than the £569.5 million at 31 May 2025. It was also £34.8 million below the £499.5 million year-end figure.
That said, there is a risk that over-50s cut back on holiday spending should they feel the pinch from inflation and higher taxes. In addition, the shares have already risen 230% over the past five years. On balance, it might be wise for investors to wait for a better entry point.
Read the press release here: https://www.corporate.saga.co.uk/investors/
