PSC upgrades earnings outlook as half-year profit grows

PSC Insurance Group has raised its 2023/24 outlook after the business posted higher first-half earnings, supported by strong contributions from its core Australia broking business, growing UK operations and recent acquisitions.

Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) is now projected at $104-108 million from $101-105 million previously, the Melbourne-based broking group said today in a half-year earnings release.

The revised outlook also includes increased underlying net profit after tax before amortisation, up to $72-75 million from $70-73 million. PSC says the new guidance excludes any contribution from the Tysers UK retail joint venture that is set to commence on April 1.

“That reflects our confidence in the second-half,” MD Tony Robinson said during this morning’s earnings call.

“We believe the outlook is really positive. Each of the parts of the business has done well in the six-month period and we believe that the strength of the business will go on seeing us delivering good organic growth.”

In the six months to December PSC achieved a 15% rise in underlying revenue to $137.8 million from a year earlier, 19% improvement in underlying EBITDA to $48.6 million and 27% surge in underlying net profit after tax before amortisation to $35.2 million.

Statutory net profit after tax attributable to members increased 31% to $21.3 million.

PSC says rates have continued to assist in the broking businesses generally but notes the pace of premium increases is now slower.

The Australia Distribution business – comprising broking and networks – recorded a 15% rise in underlying EBTDA to $22 million and underlying revenue rose to $57 million from $47.4 million.

PSC made key investments including taking a 40% stake in Bay Building Group, an insurance building business with a national presence, before the balance date and formed a new NSW-based broking branch by acquiring PSC Network member Aviation Marine General Insurance during the period.

PSC says Aviation Marine General Insurance has joined the group as a base for two further “bolt-in” acquisitions and starts a broking business within the Australian broking franchise.

Mr Robinson says the investment in Bay Building Group is aimed at offering “a service that our clients can get access to when they’re in a situation of needing those services”.

“Obviously it’s a smaller version of Johns Lyng [but] it does the same as Johns Lyng. We also believe that it’s got really good organic growth opportunity.”

For the UK business underlying revenue grew to $68.9 million from $63.1 million and underlying EBITDA rose 19% to $24.4 million.

PSC says its Tysers UK retail joint venture with AUB is set to commence on April 1 and it is still expecting EBITDA contribution in the range of $2-2.5 million for the April-June period.

“We’re hoping they are better than that but we’re not informed enough at this stage to make any other guidance,” Mr Robinson said. “I’m in the UK in the first two weeks of March and I’ll catch up with the Tysers [retail team]… and have a better sense.”