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Saga profits hit after Monarch failure

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Saga, the over-50s travel and insurance specialist, has warned profits for the current financial year will grow more slowly than expected, and that next year’s full-year profit will be 5% lower than this year.

It said it had been hit by the collapse of Monarch Airlines in October and had faced “more challenging” trading conditions in insurance broking.

When Monarch failed in October, Saga had to switch to other carriers.

This will mean a one-off cost of £2m.

In its trading update, Saga said it expected its pre-tax profits for the year to the end of January to rise by between 1% and 2%.

“This has been impacted by more challenging trading in insurance broking during the period and the Monarch Airlines administration, which has affected our Tour Operations business,” the firm said.

“Our Travel segment continues to trade well and is expected to be strongly ahead of the prior year. However, the Tour Operations business has been impacted by the collapse of Monarch Airlines with an approximate one-off cost of £2m.”

Saga said it expected an increase in the profitability of its insurance broking and travel businesses next year, “including the approximately £10m of annualised savings from the actions we have taken in the current year”.

However, it added: “Offsetting this will be a lower level of written to earned benefit and a decline in reserve releases.

“These headwinds and our decision to invest an additional £10m into customer acquisition is expected to result in underlying profit before tax for next year being approximately 5% lower than the current year.”

It said it expected the current year’s dividend to be in line with expectations.

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