Saga Shares Jump: Travel Sector Drives First-Half Growth

Saga PLC (LON: SAGA) shares jumped more than 7% on Wednesday after the company reported a robust first-half performance, surpassing expectations due to exceptional strength in its Travel business segment.

Underlying revenue increased by 7% to £320.5 million, compared to £298.2 million in the same period last year. Overall revenue rose by 9% to £328.2 million.

Trading EBITDA saw an 8% increase, reaching £67.5 million, up from £62.4 million. Net debt decreased 17%, falling to £515.1 million.

Underlying profit before tax was ahead of expectations at £23.5m but £1.3m lower than the same period last year due to increased financing costs associated with the company's new corporate debt facility. The company's leverage ratio improved to 4.3x from 4.8x, and is expected to fall further.

The successful refinancing of debt, with a new £335.0 million term loan due in 2031, significantly strengthened Saga's financial position. The sale of the Insurance Underwriting business to Ageas was completed on schedule, yielding £17.0 million more net cash than initially projected.

Saga has reorganized its Insurance Broking leadership in preparation for its 20-year partnership with Ageas, scheduled to launch in Q4 2025.

The Travel sector saw consolidated leadership, driving strong trading performance and improved customer experiences. The launch of the new River Cruise ship, Spirit of the Moselle, further supports growth in this area.

The Travel sector's strong forward bookings for the second half of the year are promising. Saga expects improved profitability in both Ocean and River Cruise, and in Holidays, driven by increased passenger numbers. Insurance has performed well, and this momentum is expected to continue.

Saga plans to invest in policy sale volumes in the second half, leveraging the underlying trading momentum and the upcoming Ageas partnership. These investments may temporarily reduce the Insurance Broking business's performance but are expected to establish a solid foundation for future growth.

Reducing debt remains a priority, and the full-year leverage ratio is now expected to be below the prior year. The Group is confident in achieving Underlying Profit Before Tax of at least £100.0 million by January 2030, with leverage falling below 2.0x in the same period.

Saga's Group Chief Executive Officer, Mike Hazell, stated “I am delighted with the progress we have made in the first six months of this financial year. These are strong results that underline the momentum we have as we continue to deliver our financial and operational objectives”.