SSP Group shares surged by as much as 12% on Tuesday as the catering operator looked to put the pandemic and constant train strikes in the UK behind it.
The owner of Upper Crust and Caffè Ritazza reported a 14% jump in revenues to £3.4bn in the year to 30 September as rail and air travel passenger numbers climbed. Operating profits at the group cleared £200m after a 26% rise.
However, the good performances in the UK, North America, APAC and EEME regions was held back by disappointment in Continental Europe.
Industrial action in the rail sector, weak trading at motorway services in Germany and disruption caused by the Paris Olympics all contributed to lower-than-expected profits as in the area, with operating profits tumbling by 49% year on year.
But investors liked the sound of SSP’s “action focused agenda” for FY25 to enhance performance and deliver higher profits.
A profit recovery plan is underway in Continental Europe, spearheaded by the appointment of a new CEO for the area in Spetember. SSP hopes to build regional operating profit margin from 1.5% to approximately 3% in FY25, rising to about 5% in the medium-term.
Another sign of confidence came in the form of a 2.3% hike to the final dividend, giving a full year dividend of 3.5p per share, up 40% year on year.
SSP also reported a robust start to the new financial year, with like-for-like sales in the first weeks up 5%.
CEO Patrick Coveney said: “As we reach the next phase of our evolution post-Covid and with strong underlying growth across the group, our focus now is on driving greater value from a strengthened base.
“I am excited about the prospects for our company and look to FY25 and beyond with confidence as we continue to see significant opportunities for SSP to drive compounding long-term growth and deliver shareholder returns.”
Shares in SSP are up more than 15% this week to 180p, back to levels not seen since July. But the group remains down 21% overall in 2024 given worrying noises from the UK rail watchdog in the summer after it found there was a lack of competition in the catering sector leading to higher costs for passengers.
“Though the Paris Olympics didn’t result in the sales boost anticipated, Taylor Swift fans delivered a huge lift to sales in Australia and Sweden whilst the star’s Eras tour packed out stadiums,” noted Danni Hewson, AJ Bell head of financial analysis.
“It’s not all been plain sailing, with train strikes taking a bite out of revenues, and the business is also having to price in increased wage costs from the increase in National Insurance announced in the last UK Budget.”
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