Saga PLC (FRA:65J) (H1 2024) Earnings Call Highlights: Navigating Growth Amidst Challenges

GuruFocus News
4 min read

In This Article:

  • Underlying Revenue Growth: Increased by 11% compared to the prior year.

  • Underlying Profit Before Tax (PBT): GBP27.2 million, more than 3 times the prior year.

  • Statutory Loss Before Tax: GBP104 million, due to a GBP138.3 million impairment of insurance broking goodwill.

  • Net Debt Reduction: Reduced by GBP42.8 million over the past 12 months, standing at GBP614.6 million as of July 31, 2024.

  • Available Operating Cash Flow: GBP54.4 million in the first half.

  • Ocean Cruise Load Factor: 90%, up 7 percentage points from last year.

  • Ocean Cruise Per Diem: GBP362, 9% higher than the previous year.

  • River Cruise Load Factor: 86%, up 3 percentage points from last year.

  • River Cruise Per Diem: GBP340, 15% higher than the previous year.

  • Travel Business Revenue Growth: 29% higher on a comparable basis.

  • Insurance Underwriting Average Earned Premiums: 39% higher than the previous year.

  • Net Combined Operating Ratio (COR): Reduced by 23 percentage points to 102%.

  • Insurance Broking Policy Sales: 13% fewer policies sold.

  • Trading EBITDA Growth: Increased by 27%.

  • Debt Leverage Ratio: Reduced to 4.6 times from 7 times the prior year.

Release Date: October 11, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Saga PLC (FRA:65J) reported a strong overall financial performance with underlying revenue growth of 11% and underlying profit before tax of GBP27.2 million, more than three times that of the prior year.

  • The company is in exclusive negotiations with Ageas for a proposed transaction, which includes selling its insurance underwriting business and forming a 20-year affinity partnership, aligning with its strategy to move to a capital-light model.

  • Saga's cruise and travel businesses showed significant growth, with ocean cruise achieving a load factor of 90% and river cruise a load factor of 86%, both with higher per diems compared to the previous year.

  • Debt reduction remains a strategic priority, with Saga reducing net debt by GBP42.8 million over the past 12 months and GBP22.6 million in the last six months.

  • Saga's focus on customer engagement has led to a 21% increase in website visits and a 16% rise in consented individuals, enhancing its customer database and cross-sell opportunities.

Negative Points

  • Saga PLC (FRA:65J) reported a statutory loss before tax of GBP104 million due to a GBP138.3 million impairment of insurance broking goodwill.

  • The insurance broking business faced cyclical challenges, with a 13% decrease in policy sales and market conditions impacting profitability, particularly in the home insurance segment.

  • The travel insurance market became highly competitive, affecting Saga's ability to compete and resulting in lower new business volumes.

  • Saga's insurance broking business experienced a decline in competitiveness due to net rate inflation and reduced panel competitiveness, impacting policy sales and profitability.

  • The company anticipates net debt to be slightly higher at the end of the year due to lower cash generation from the insurance business and continued repayments on cruise ship facilities.

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