Release Date: April 09, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Saga PLC (STU:65J, Financial) reported a strong financial performance with growth in revenue, trading EBITDA, and underlying profit before tax (PBT).
- The company's travel businesses, including ocean and river cruises, showed significant growth with increased load factors and per diems.
- Saga PLC (STU:65J) successfully reduced net debt by £46.7 million, bringing it down to £590.5 million.
- The company has secured long-term financing arrangements, providing funding certainty for the next six years.
- Saga PLC (STU:65J) has a strong brand presence with 93% brand awareness among the over-50 demographic in the UK, which is expected to grow significantly by 2050.
Negative Points
- The insurance broking segment reported materially lower earnings, particularly in home insurance, due to fewer policies available for renewal and inflationary pressures.
- Saga PLC (STU:65J) anticipates a transitional year in 2025-2026 with lower underlying PBT due to the new partnership model with Aegeus.
- The company's net debt reduction pace is expected to slow in 2025-2026 due to one-off items related to refinancing and the Aegeus transaction.
- Finance costs increased due to the utilization of a loan facility, impacting overall profitability.
- The transition to a new insurance model with Aegeus may pose challenges in maintaining margins and competitiveness in the short term.
Q & A Highlights
Q: How does Saga plan to grow customer numbers in the travel business given the current trends in load factors and customer numbers?
A: Mike Hazel, CEO, explained that the focus should be on load factors rather than customer numbers due to the varying itineraries and cruise durations. Despite a decrease in customer numbers, the load factors are strong, and there is significant demand for additional capacity in the river business. The growth opportunity across travel businesses is evident in revenue, load factor, and passenger numbers, supported by strong early bookings for the new season.
Q: How will the transition to the partnership with Aegeus affect the three-year fixed insurance product and its margins?
A: Mark Watkins, CFO, clarified that the three-year product is a price guarantee, and the underwriting aspect can change annually or mid-term. The transition from a panel structure does not impact the three-year fixed price product as the price guarantee is provided by the broking business. The future of the product post-transition will be determined in discussions with Aegeus.
Q: Can you provide guidance on insurance broking for 2025/26?
A: Mike Hazel stated that while specific guidance is not provided, the focus is on transitioning to the partnership with Aegeus by the end of the year. The current year started with fewer policies, impacting renewals. The emphasis is on driving price and competitiveness to increase volume, with the broking partnership being a key change for the business.
Q: How does Saga plan to leverage cross-selling opportunities within the UK's fastest-growing demographic?
A: Mike Hazel highlighted the potential for cross-selling due to the portfolio nature of Saga's business. The complexity of past operations led to a siloed approach, but there are clear opportunities to encourage cross-holding and broaden customer relationships across different product categories.
Q: How is Saga addressing inflationary pressures in the travel business?
A: Mike Hazel noted that Saga's affluent customer base is resilient to economic turmoil, and the travel propositions are price elastic, allowing for flexibility in response to market conditions. The combination of a resilient customer base and price elasticity means inflation is not expected to materially impact the travel business.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
