Shares in over-50s insurance and travel specialist Saga have plummeted after the company warned that underlying profits would grow at a slower than expected rate following the collapse of Monarch Airlines.
The company said it expects underlying growth in pre-tax profits to be between 1 and 2 per cent for the financial year that ends in January and that profits would dip by 5 per cent in 2018.
Saga said it had been impacted by the collapse of Monarch Airlines in October and more challenging trading conditions in insurance broking.
It said that, while its travel segment continues to do well, the collapse of Monarch had resulted in an approximate one-off cost of £2m as it paid out for customers forced to change carriers.
After the announcement on Wednesday morning, shares in the firm fell by more than 23 per cent.
Following a review of its operating structure Saga said that it would save approximately £10m next year.
It expects to incur a one-off cost of around £4m relating to the changes that will be implemented to achieve these savings.
As part of these cost savings, Saga said earlier this week that around 100 employees had been made redundant.
Lance Batchelor, chief executive of Saga, said that the firm continues to develop the business for the long term against a backdrop of “challenging trading conditions”.
“With greater customer insight and a stronger business platform, now is the right time for Saga to invest in growing the customer base and the business,” Mr Batchelor said.
“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," he added.
