Saga (LON:SAGA) said on Tuesday that demand for its cruises in the first half exceeded internal expectations, helping drive higher holiday revenues even as the company signalled potential weakness in overall passenger volumes for the year amid geopolitical disruption in the Middle East. The company also said it remains on course to meet its full-year guidance. Shares in the group dipped by around 1% on the news.
Management expects ocean cruise revenue in the first half to be above the prior year, underpinned by a 13% rise in booked per diems. River cruises are also projected to produce higher revenue in the period, with booked per diems reported as 4% higher than the previous year.
In its insurance division, Saga said the reorganisation of operations under a fresh partnership with Ageas has outperformed early targets. That performance activated a payment of A310.5 million, the company disclosed.
While full-year holiday revenue is forecast to be marginally ahead of last year, the company warned that passenger numbers could be slightly below the prior year. Saga attributed changes in customer behaviour to the Middle East conflict, with more clients opting for shorter, short-haul breaks instead of longer haul trips.
The company expressed confidence about the rest of the year, pointing out that its customer base typically books well in advance. Saga added that commodity and foreign exchange risks are fully hedged through to the end of 2027.
The combination of stronger per-diem pricing on ocean and river cruises, a positive early result from the insurance restructure with Ageas, and advance bookings underpinned management's forward-looking stance. At the same time, the firm highlighted that evolving travel preferences prompted by geopolitical instability could weigh on passenger counts even if revenue holds slightly higher.
Investors reacted modestly to the update, sending the stock lower by about 1% following the release.
Company outlook and operational notes
- Ocean cruise booked per diems up 13% year-on-year for the first half.
- River cruise booked per diems up 4% year-on-year for the first half.
- Insurance unit exceeded early targets under the new Ageas partnership, triggering a A310.5 million payment.
- Full-year holiday revenue expected to be marginally ahead of the prior year, but passenger numbers may be slightly lower.