Holiday operator Saga has placed orders for up to two new cruise ships to help meet its growing demand for cruise holidays.
The company, which caters to the over-50s currently has two ships – the Saga Pearl II and Saga Sapphire. It says demand for cruise holidays was outstripping supply and it would be expanding its fleet by investing in the new vessels.
A purpose-built ship from the Meyer Werft shipyard in Germany has been ordered and is expected to be delivered in 2019 – there will be an option for a second ship to be delivered in 2021.
Strong performance in the holidays sector offset lower profits in cruising, the company said the drop in profits was mainly the result of increased spending on repair and maintenance.
The FTSE 250 company also motor insurance – and it has reported that trading profits were up one per cent in the first half of the year to £117.5 million. This was helped with an 11 per cent rise in earnings in the travel business and a 2.6 per cent rise in profits from the motor insurance division.
Strong competition in the car insurance market caused a drop in average premiums during the first six months of the year – and this left divisional sales down 1.8 per cent to £157.2 million.
However the firm also sold more insurance policies – those rose by 9.7 per cent to 1.1 million during the period and there were also fewer claims.
Saga also reacquired Bennets – a motorbike insurance business for the over-50s. This helped to push up profits.
Commenting on the first-half results, chief executive Lance Batchelor said that continued strong cash generation has allowed the business to reduce its debt ratio.
"The solid performance in our core business of financial services and travel has meant positive growth in underlying profitability," he added.
Mr Batchelor recently joined Saga from the Domino's Pizza group. "We are confident of delivering on our targets for the full year and of continuing to build sustainable returns for shareholders through profit growth, cash generation and our progressive dividend policy," he said.
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