Shares in Saga (SAGA) sailed to a five-year high after the travel firm swung back into the black for FY26 amid strong performances from its travel and insurance businesses.
The FTSE 250 company also expressed confidence in meeting its medium-term targets.
The firm believes it can grow underlying pre-tax profits to ‘at least’ £100 million and reduce leverage to below two times by January 2030. There was also relief as Saga highlighted its ‘minimal exposure’ to the war-torn Middle East and made reassuring noises around oil and currency risk.
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.
The year to January 2026 was a transformational one for Saga, which simplified and de-risked its business by restructuring its insurance operations.
FY26 results exceeded guidance, driven by strength across travel and insurance. Revenue rose by 12% to £660 million and underlying pre-tax profits increased by 19% to a better-than-expected £44.2 million despite higher finance costs.
Saga swung from bottom-line losses of £160.2 million to reported pre-tax profits of £2.1 million and pruned its net debt pile by 16% to £499.5 million.
During the year, Saga sold its insurance underwriting business to Ageas, with whom it also launched its motor and home insurance partnership.
We are sailing
Buoyed by the strong FY26 performance and the strong forward bookings in travel, Saga said: ‘We look ahead to 2026/27 with confidence and expect to deliver continued growth in both profit and cash generation.’
Addressing the outlook for travel, Saga said: ‘While mindful of the current uncertainty in the Middle East, we have minimal exposure to the region, with no Cruise itineraries and only limited Holidays bookings to Egypt, Cyprus and Turkey.
‘We are 100% hedged against our current foreign exchange risk for both 2026/27 and 2027/28, and 100% and 75% hedged for oil commodity risk respectively.’
Having simplified its business and returned to bottom line profitability, Saga is an increasingly compelling investment proposition. It is also reassuring to see strong forward bookings in travel.
That said, there is a risk that over-50s cut back on holiday spending should the cost-of-living backdrop deteriorate.
And Saga is still grappling with a significant debt load, which could prove problematic if interest rates rise. With the shares trading at five-year highs, we would sit on the sidelines for the time being.
Read the press release here: https://www.corporate.saga.co.uk/investors/
You might also like these stories:
