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Saga keeps FY targets despite profit slump and Brexit jitters

The company, which is looking to find a new chief executive after Lance Batchelor in June said he would retire next year, has been trying to shake off its image as only serving 'old people' and begun rebranding after a profit warning in April.

Article originally published by Reuters. Hargreaves Lansdown is not responsible for its content or accuracy and may not share the author's views. News and research are not personal recommendations to deal. All investments can fall in value so you could get back less than you invest.

Saga's first-half profit more than halved as uncertainty over Brexit hurt travel bookings, but the over-50s tourism and insurance firm stood by its annual targets citing first positive effects of its insurance unit overhaul.

The company, which offers escorted tours, river and ocean cruises as well as motor and home insurance, has been hit by subdued demand in its travel business as uncertainty over how or when Britain will leave the European Union rises.

It said doubts over the divorce deal were hurting its travel insurance business and limiting consumers' willingness to commit to holidays well into 2020/2021. Saga had earlier said this sentiment was seen only this year.

The company, which is looking to find a new chief executive after Lance Batchelor in June said he would retire next year, has been trying to shake off its image as only serving "old people" and begun rebranding after a profit warning in April.

Saga has flagged that it was battling margin pressures in its insurance unit, which accounts for the bulk of its earnings, and announced plans to offer home and motor policies with three-year fixed pricing directly to customers. It also cut prices for renewals in an attempt to revive the segment.

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"We have made good progress against our strategic reset. The sales of our 3-year fixed price insurance are encouraging, and a higher proportion of customers are coming to us direct," Batchelor said.

Saga's margins in the tours business have also been crimped due to competitive discounting, but it said the "challenging factors" were not expected to continue into the second half of the year.

The company said pretax profit fell 52.1% to 52.6 million pounds ($65.61 million) for the six months ended July 31, below the company-provided consensus figure of 55.0 million pounds.

($1 = 0.8017 pounds) (Reporting by Muvija M and Pushkala Aripaka in Bengaluru Editing by Tomasz Janowski)


Copyright (2019) Thomson Reuters. This article was from Reuters and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to legal@newscred.com.

Article originally published by Reuters. Hargreaves Lansdown is not responsible for its content or accuracy and may not share the author's views. News and research are not personal recommendations to deal. All investments can fall in value so you could get back less than you invest.

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