AUS
NZ
UK
CA
USA
FRA
GER
ESP
ITA
NLD
PRT
SWE
GRC
IND
POL
BRA
ZAF
RUS
CHN
UAE
Highlights
Revenue and EBITDA Growth: Saga plc reported an 11% increase in underlying revenue, driven mainly by strong performance in its Cruise and Travel sectors, and a 27% rise in Trading EBITDA, reaching £67.4 million.
Profit Before Tax Surge: The company's underlying profit before tax increased significantly to £27.2 million, up from £8.0 million in the same period last year, showcasing operational improvements, particularly in Cruise and Travel.
Challenges in Insurance Broking: Despite the overall positive performance, Saga faced challenges in its Insurance Broking segment, resulting in a loss before tax of £104.0 million, which includes a £138.3 million impairment related to this business.
Saga plc (LSE:SAGA), the UK's leading specialist in products and services for individuals over 50, has published its interim results for the six-month period ending July 31, 2024. The results indicate a solid performance in several areas, despite facing challenges in the Insurance Broking segment.
Operational and Financial Highlights
- Revenue Growth: Saga reported an 11% increase in underlying revenue, primarily driven by robust performance in its Cruise and Travel businesses, alongside improved results from Insurance Underwriting. However, the Insurance Broking sector faced ongoing challenges that impacted overall performance.
- Trading EBITDA: The Group's Trading EBITDA rose to £67.4 million, reflecting a 27% increase compared to the same period last year. This growth signals effective operational strategies and increased demand in core sectors.
- Profit Before Tax: Underlying Profit Before Tax surged to £27.2 million, more than tripling from £8.0 million in the previous period. This significant rise underscores the Group's operational improvements, particularly in Cruise and Travel.
- Impairment in Insurance Broking: Despite the positive overall performance, the Group reported a loss before tax of £104.0 million, compared to a loss of £77.8 million in the prior period. This loss includes an impairment of £138.3 million for goodwill related to the Insurance Broking business, reflecting the challenging market conditions.
- Operating Cash Flow: Available Operating Cash Flow was £54.4 million, down 37% from the previous year. This decline is attributed to one-off beneficial changes in customer deposit arrangements from the previous year, alongside lower Trading EBITDA from Insurance Broking and Underwriting dividends.
- Outlook for Profitability: The Group remains on track to achieve a full-year Underlying Profit Before Tax that is broadly consistent with the prior year, despite the setbacks in Insurance Broking.
Strategic Outlook
Saga’s positive trajectory in Cruise and Travel, coupled with a strong pipeline of future bookings, is expected to bolster growth across these segments. Key indicators include:
- Ocean Cruise Performance: The load factor for the 2024/25 Ocean Cruise season is currently at 90%, with a per diem of £359. This marks an improvement from last year's 87% load factor and £331 per diem. The Ocean Cruise Trading EBITDA (excluding overheads) is projected to exceed the annual target of £40 million per ship.
- River Cruise Trends: The River Cruise segment is also performing well, with a booked load factor of 88% and a per diem of £327, both of which are higher than the same period last year.
- Travel Growth: Booked revenue for the Travel segment is currently £162.2 million, with 54,400 passengers projected, compared to £140.3 million and 50,300 passengers last year.
Despite the positive trends in Cruise and Travel, the Insurance Broking segment continues to face challenges, particularly towards the end of the first half of the year. Factors such as inflationary pressures in home insurance and increased competition in motor insurance have led to a decrease in policy sales, a trend expected to persist into the second half of the year.
Future Developments
In the Insurance Underwriting division, pricing increases resulting from ongoing claims inflation are anticipated to improve financial results, positively impacting both Underlying Profit Before Tax and the reported net Combined Operating Ratio (COR) for the full year.
The Money segment continues to be developed for medium-term growth, with the introduction of new products expected to take time to contribute materially to earnings. Saga expects Underlying Profit Before Tax in the second half of the year to be similar to that of the first half.
While the current market dynamics in Insurance remain challenging, the Group’s strong start to the year in Cruise and Travel indicates potential for a solid performance in the full year, aiming for an Underlying Profit Before Tax that aligns with the previous year.
