- Profit ahead of guidance
- Dip on 2025/6 outlook
- Medium-term profit ambition of £100m
What over-50s lifestyle group Saga (SAGA) gave with one hand, it took away with the other as the travel and insurance company reported better than previously guided full year profit but warned of a lower 2025/6 result due to a material increase in finance costs.
Mr. Market seemed undecided what to make of the results and outlook with the shares flip-flopping between gains and losses in early trading.
Underlying revenue for the year to 31 January 2025 increased 4% to £768.3 million while total underlying pre-tax profit was up 25% to £47.8 million, ahead of prior guidance.
The company put the strength down to high levels of customer demand for its differentiated ocean and river cruise offers.
Excluding discontinued underwriting operations, underlying pre-tax profit was £37.2 million, up 8% on the prior year.
STRATEGIC OVERHAUL
In December 2024 Saga signed an agreement with Belgium insurer Ageas SA (AGS:EBR) to transition to a new 20-year motor and home insurance partnership, expected to go live in the fourth quarter of 2025.
The combination will see Ageas undertake the underwriting and pricing risk alongside operational administration, while Saga will focus on brand management, marketing and customer insights.
The group successfully refinanced its debt with new long-term credit facilities comprising a £335 million term loan, a £50 million revolving credit facility and a £100 million delayed-draw term loan.
Net debt fell to £590 million equating to a leverage ratio of 4.7 times trading EBITDA (earnings before interest, tax, depreciation, and amortisation) from 5.4 times in the prior year.
YEAR OF TRANSITION
Saga said the coming year will be one of transition as the new insurance arrangements are bedded in, while the travel businesses are expected to deliver further growth, supported by ‘strong’ forward bookings.
A material increase in finance costs is expected to result in a lower pre-tax profit in 2025/6 before returning to growth thereafter.
Over the next five years the group aspires to take underlying pre-tax profit to at least £100 million and leverage below two times.
