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Cruise boosts Saga’s profit, search continues for strategic partner

Saga reported a return to profit for its cruise and travel businesses last year, however it continues to look for a partner for its two-ship ocean cruising arm in order to reduce debt and support growth.

Announcing its preliminary results for the year ended January 31, Mike Hazell, Saga's Group CEO, said the company's ocean cruise business 'had an outstanding year and, as a result, we far exceeded our initial earnings targets, while river cruise and travel both returned to profit for the first time since the pandemic.’

Over 50s

The UK's specialist in products and services for people over 50 cited strong customer demand for its ocean cruise division and strong load factors and pre diem for its river cruise operations.

Ocean cruise reported a profit before tax of £35.5m, compared with an underlying loss of £0.7m in the previous year, a year-on-year improvement of £36.2m.

Revenues finished on £215.9m, 28% growth compared with 2022/23, supported by a load factor of 88% and per diem of £331, significantly ahead of the 75% and £318 in the prior year.

River cruise success

On the rivers, there was a return to profit, supported by strong load factor and per diem with a £3m profit before tax reported, compared to a loss of £5.1m in 2022/23, a year-on-year improvement of £8.1m.

River cruising generated revenues of £43.8m, 52% ahead of the year before, supported by a load factor of 85% and per diem of £285. This reflects a 43% increase in passengers to 16.6k.

Saga’s customer database continues to be one of its core assets, containing data on 9.6m, and contact details for over 7.2m people over 50 in the UK. Its marketable email base grew by more than 9% in the past 12 months.

Forward bookings

Looking ahead for cruise and travel Saga reported an 'encouraging pipeline of bookings’, for 2024/25.

Bookings for ocean cruise remain ‘exceptionally strong’ with a secured load factor for 2024/25 of 78% and a per diem of £367. This is 4ppts and 9% ahead of the already strong 74% and £338 at the same time last year.

River cruise bookings for 2024/25 are also positive and significantly ahead of the same point last year, with a load factor of 72% and per diem of £339 compared with 66% and £299.

Saga Group says its priorities remain unchanged; to reduce debt level going forward and increase its strategic flexibility. Net debt was reduced by £74.5m (10% lower than end January 2023) closing at £637.2m.

Prospective partners sought

Non-executive Chairman Sir Roger de Haan noted that the [two ship] ocean cruise operations will, in time, become restrained through a lack of capacity and ‘we are exploring options to continue to grow this business with the support of a partner.’

Hazell added, ‘this will be consistent with our move to a capital-light business model, would support further growth, crystallise value, reduce debt and enhance long-term returns for shareholders.’.

‘Unlike our current ocean cruise business, we are able to scale river cruise in a capital-light way,’ he added. Saga launched Spirit of the Douro in March 2024, and a third purpose-built ship, Spirit of the Moselle, is to follow in July 2025.