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Saga warns of more “challenging trading” in insurance broking, Monarch collapse impact on travel

In a trading update, the over-50’s travel and insurance specialist said it expected its full-year underlying pre-tax profit to grow by just 1%-2%
Monarch airlines plane
Saga added that its tour operating business would see one-off cost of about £2mln due to the impact of Monarch Airlines going into administration

Saga PLC (LON:SAGA) saw its shares plunge today after it warned of more “challenging trading” in insurance broking and said the collapse of Monarch Airlines has affected its tour operations business.

In early morning trading, the FTSE 250 listed stock had dropped over 23%, or 42.6p to 138.70p.

READ: Saga goes down VIP route to stem high-spender decline

In a trading update for the period from 1 August 2017 to 5 December 2017, the over-50’s travel and insurance specialist said it expected its full-year underlying pre-tax profit to grow by just 1%-2%.

The FTSE 250 listed group added that its tour operating business would see one-off cost of about £2mln due to the impact of Monarch Airlines going into administration.

However, Saga said its travel segment “continues to trade well and is expected to be strongly ahead of the prior year.”

For the full year, it added, the written profit of its retail broking business is expected to be ahead year on year, with a strong performance in motor partially offset by a challenging trading environment in home and travel insurance.

Saga also said it had completed a review of its operating structure and would see about £10mln of annualised cost savings next year expects to incur a one-off cost of circa £4mln relating to these changes.

READ: Over-50's specialist Saga says core insurance, travel businesses continued good start to the year

The group added that it expects the current year dividend to be in line with its expectations, and “remains fully committed” to its stated dividend policy.

Lance Batchelor, Saga’s CEO, said: "Against a backdrop of some challenging trading conditions in our final quarter, we continue to develop the business for the long term.”

He added: “We are confident that the actions taken will ultimately see a better quality of earnings and profit growth across the business, supporting our progressive dividend policy for the benefit of our shareholders."

 -- Adds share price --

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