Saga Shares Fall 35%

Thursday, 4th April 2019 08:25 - by Rajan Dhall

Shares in the insurance firm Saga dropped a whopping 35% after the company announced plans to restructure its fledgeling business. The CEO stated that they have faced increasing challenges from the "commoditisation of the markets" and this had an impact on customer numbers and profitability. Here are some of the key components of the report:

• Underlying Profit Before Tax for the 2019/20 financial year is expected to be between GBP 105m-120m
• Reduction in final dividend, Proposed full year dividend reduced to 4.0p with expected future payout of approximately 50%
• Underlying Profit Before Tax  GBP 180.3m vs Prev GBP 190.6m
• Profit (loss) before tax from continuing operations -GBP 134.6m vs Prev GBP 180.9m 
• Loss before tax of (GBP 134.6m) after Goodwill impairment of GBP 310m

In terms of what to expect from the share price in the future, we will need to wait and look for a basing pattern. Currently, the share price is in free fall and I would not suggest value picking here. The 60p and 50p levels could provide some psychological support but I think we need to wait for some kind of consolidation. Its an interesting story to keep an eye on as it feels like the business is starting from scratch and Its probably better than continuing in the same direction to fold at a later date but as in all things in life it is a gamble and they are going up against some new players in the game who are more advanced in terms of technology and the appeal to a younger audience. 

The Writer's views are their own, not a representation of London South East's. No advice is inferred or given. If you require financial advice, please seek an Independent Financial Adviser.