Saga Reports Widening Losses Despite Revenue Growth in Final Results
Why we think this is bad
The financial results paint a challenging picture for Saga. Despite a 4.8% increase in Underlying Revenue to £768.2m, the company reported a significant loss before tax of £160.2m, which is worse than the previous year's loss of £123.8m. This widening loss is a major concern and overshadows the revenue growth. Additionally, the company faces several headwinds, including a material increase in financing costs expected in 2025/26, which will likely lead to lower Underlying Profit Before Tax. The transition to a new insurance partnership model and the sale of the underwriting business add further complexity and risk. While there are some positive aspects, such as the reduction in Net Debt and securing new credit facilities, these are outweighed by the overall financial performance and challenging outlook.
Key Points
- Loss before tax increased to £160.2m from £123.8m in the previous year
- Underlying Revenue grew 4.8% to £768.2m
- Net Debt reduced to £590.5m from £637.2m
- Travel segment, particularly Ocean Cruise, showed strong performance
- Insurance division facing challenges and undergoing significant transition
- New credit facilities secured, providing financial flexibility
- Expecting material increase in financing costs in 2025/26
- Aiming for annual underlying profits of at least £100.0m within five years
- No final dividend recommended for the 2024/25 financial year
Summary
Saga plc's final results for the year ended 31 January 2025 reveal a mixed financial performance. While Underlying Revenue increased by 4.8% to £768.2m, the company reported a significant loss before tax of £160.2m, worse than the previous year's £123.8m loss. The Travel segment showed strong performance, particularly in Ocean Cruise, but the Insurance division faced challenges. The company has reduced its Net Debt to £590.5m from £637.2m and secured new credit facilities, providing some financial flexibility. However, Saga expects a material increase in financing costs in 2025/26, which will likely lead to lower Underlying Profit Before Tax. The company is undergoing a significant transition with its insurance business, including a new partnership model and the sale of its underwriting operations. Despite these challenges, Saga aims to achieve annual underlying profits of at least £100.0m and reduce leverage to below 2.0x EBITDA within the next five years.