Published:  03:00 AM, 07 December 2017

UK's Saga shares plunge after cutting profit

UK's Saga shares plunge after cutting profit Monarch airplanes are parked on the runway after the airline went into administration at Newquay airport, Newquay, Britain. -Reuters

Britain's Saga Plc said it expected its underlying pretax profit to grow by just 1-2 percent in the current year and fall five percent next year, sending its shares 20 percent lower.

In an unscheduled trading update, the provider of travel and insurance services for people aged 50 and over said more challenging trading in insurance broking and the collapse of Monarch Airlines would limit profit growth in the year to the end of January 2018.

An investment of 10 million pounds ($13.4 million) to take on more customers, a fall in earned profit and lower reserve releases would push underlying pretax profit 5 percent lower in the the year to January 2019.

Saga shares tumbled 20 percent to 144.1 pence by 0825 GMT, taking them to the bottom of the FTSE Midcap Index .FYMC. They were priced at 185 pence when the company listed in 2014.

Saga said its tour business would see one-off cost of about 2 million pounds ($2.7 million) hurt by Monarch going into administration. Saga also said it had completed a review of its operating structure and would see about 10 million pounds of annualized savings next year.

-Reuters


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