SSP shares rise as profits surpass £200m despite European disruption

Shares in SSP Group soared on Tuesday after the Upper Crust owner revealed bumper profit growth thanks to a buoyant global travel market and strong domestic demand.

The food services company, which also owns Caffè Ritazza, revealed that operating profits rose 32 per cent to £206m in the year to September, following strong results in all regions except continental Europe.

Underlying revenue across the UK and Ireland rose 15 per cent to £893 million amid a rise in air passenger numbers, a continued rebound in travelers and fewer rail workers strikes.

SSP’s UK and Ireland segment also enjoyed strong sales at its Marks & Spencer Simply Food franchise operations.

At the same time, its North American sales rose by more than a quarter at constant currency levels to £814 million thanks to acquisitions including Midfield Concessions Enterprises and the opening of outlets in cities such as Seattle and Chicago.

Revenue from continental Europe disappointed with 9 per cent growth to £1.2bn, amid a strike, lower-than-expected demand during the Paris Olympics and a weak performance from its German motorway services division.

SSP’s total underlying turnover still expanded 17 per cent to £3.4bn, while its pre-tax profits rose by more than a third to £119m.

SSP Group Shares rose 11.5 per cent to 180.7p, making them the third best performer on the FTSE 250 index behind Victrex and Discoverie Group.

Patrick Coveney, chief executive of SSP, said the business “has strong fundamentals and benefits from sustained long-term growth trends in the global travel market.”

The London-based company’s sales have continued to grow since October, rising 13 per cent in the first eight weeks of the new financial year.

For the full year, it forecasts revenue will rise to between £3.7bn and £3.8bn and operating profits will reach between £230m and £260m.

SSP expects to double operating margin in its European business to around 3 percent over the period, followed by 5 percent in the medium term.

Coveney added: “As we reach the next phase of our post-Covid evolution and with strong underlying growth across the group, our focus is now on driving further value from a strengthened base.”

“In continental Europe, we are accelerating our profit recovery plan, in particular generating profitability from the significant number of recently renewed and expanded contracts.”

SSP, which was previously owned by catering giant Compass Group, operates around 3,000 outlets in airports and train stations in 37 countries.

Along with its own brands such as Upper Crust, the company operates franchises on behalf of famous names such as Leon, Starbucks, Burger King and Yo! Sushi.

Analysts at Shore Capital said: ‘The key for us is for SSP to be able to demonstrate profitable revenue growth and improve free cash generation.

“Here we see encouraging progress in today’s update and commend management for a substantially improved investment script.”