Savor returns to profit with record 14.5% EBITDA margin and plans first dividend

• Net profit after tax of $1.3m, reversing prior year loss
• Record operating earnings margin of 14.5%, up 10%
• Revenue slightly down to $55.2m, reflecting strategic portfolio changes
• Leverage reduced to 1.92 times, further to 1.8 post-year-end
• New venues Bar Ziti and Flush Golf contribute to earnings and margin expansion

Profitability Returns Amid Margin Surge

After years in the red, Savor Limited (NZX:SVR) has finally turned the corner, reporting a net profit after tax of $1.3 million for the year ended 31 March 2026. This compares to a $1.2 million loss the previous year, and when adjusted for tax loss carry forwards, the cash equivalent net profit sits around $1.8 million. The turnaround is underpinned by a record operating earnings margin of 14.5%, the highest in the Group’s history and up from 12.8% in FY25.

The hospitality group’s revenue dipped slightly to $55.2 million, down 2.6% from $56.6 million, largely due to the planned exit from the Seafarers building at the end of FY25. However, this was partly offset by contributions from two new venues opened in September 2025; Bar Ziti and Flush Golf; located in the Britomart precinct. These new sites have broadened Savor’s customer base and boosted margins, with Flush Golf’s entertainment-led format delivering stronger profitability and lower labour intensity than traditional food-led venues.

Balance Sheet Strength and Debt Reduction

Alongside improved earnings, Savor’s balance sheet showed marked improvement. Gross leverage fell from 2.4 times at the end of FY25 to 1.92 times as at 31 March 2026, with a further $0.5 million debt repayment in April 2026 reducing leverage to 1.8 times. Net debt metrics are even more favourable, with net leverage estimated around 1.4 times earnings after rental costs. The Group finished the year with net cash of $1.7 million, its strongest position since listing.

This deleveraging stems from disciplined capital management and operational cost control, including a more than 1% improvement in cost of goods sold to below 28% of revenue, and approximately $1 million saved in venue wages. Utilities and overheads have also been actively managed down, supported by a four-pillar performance framework embedded across venues since FY24.

Technology and AI Driving Operational Efficiency

Savor is investing in operational technology and artificial intelligence initiatives aimed at enhancing customer engagement and venue profitability. These in-house AI tools, developed without external contractors, are already supporting marketing content production, invoice processing, demand forecasting, rostering, and supplier cost management. The Group believes these technologies will reduce manual effort and improve scalability, with a particular focus on predictive wage management; a 1% reduction in wages could add about $1 million to the bottom line.

Dividend and Growth Strategy

Reflecting the Group’s improved financial health and confidence in future earnings, Savor plans to pay its first-ever dividend to shareholders later in FY27, fulfilling a commitment first signalled in FY23. The Board remains selective about expansion, focusing on brand fit, deal terms, and clear financial returns. Bar Ziti and Flush Golf exemplify this disciplined growth approach, combining high-impact concepts with strong margin potential.

While the global economic outlook remains uncertain, Savor’s CEO Lucien Law noted that with over 65% of earnings historically generated in summer months, the Group can look through current instability when forecasting FY27 results. A further update on guidance is expected at the Annual Shareholders Meeting in September.

Governance and Board Composition

Savor’s Board comprises four directors, including two independent members, with Executive Chair Paul Robinson and CEO Lucien Law leading the Group. The Board maintains rigorous governance practices, although it does not fully comply with all NZX Corporate Governance Code recommendations due to size and cost considerations. Independent audit and remuneration committees oversee financial integrity and executive compensation. Directors’ remuneration was reduced by half from October 2025 as part of cost discipline measures.

Bottom Line?

Savor’s return to profit and record margins mark a pivotal moment, but the Group’s cautious outlook and selective growth stance highlight the challenges ahead in a volatile hospitality sector.

Questions in the middle?

• How will Bar Ziti and Flush Golf evolve as they mature and impact future earnings?
• What operational efficiencies will Savor’s AI initiatives unlock beyond wage management?
• Will Savor maintain its disciplined expansion approach amid ongoing economic uncertainty?