Revenue for its travel business is expected to increase tenfold, but winning business doesn't come cheap and marketing and administrative costs will partly hinder Saga's recovery.
British holidays group Saga Plc on Tuesday warned that its travel business could report a small underlying loss in 2022-23, before returning to a profit next year.
Saga, which sells cruise holidays and insurance to over 50-year-olds, said revenue in its travel business was likely to increase tenfold, though marketing and administrative expenses could push it into a loss.
The loss at its travel unit is expected to be in line with its forecast, Saga said in a trading statement.
Meanwhile, tour bookings for the coming fiscal were strong, aided by increased demand for long-haul destinations, the company said, adding that booked revenue for the travel segment rose 13 percent to $136.4 million.
Saga had, in September forecast, a group profit for the year, despite a weak market outlook.
CEO Euan Sutherland reiterated those market challenges.
“We continued to navigate a challenging period for the UK motor insurance market and, although there has been some pressure on our underwriting business, our retail broking result will be in line with expectations,” Sutherland said.
On Monday, the group said it was in discussions to sell Acromas Insurance Co, the underwriting unit of its wider insurance division, to help pay down its debt.
The group expects its net debt at the end of this month to be slightly higher than the $889.1 million it projected at the end of July.
(Reporting by Radhika Anilkumar in Bengaluru; Editing by Dhanya Ann Thoppil)
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Photo credit: Saga ship Spirit of Adventure docked in Cadiz, Spain. A Guy Named Nya / Flickr