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

Shares of SSP Group rose on Tuesday after the owner of Upper Crust posted huge profit growth on the back of a booming global travel market and solid domestic demand.

The foodservice company, which also owns Caffè Ritazza, announced that operating profit rose 32 percent to £206 million in the year ending September, following strong results in all regions except continental Europe.

Underlying revenues in Britain and Ireland rose 15 percent to £893 million, due to rising air passenger numbers, a continued recovery in passenger numbers and fewer strikes by rail workers.

SSP’s UK and Irish segment also saw robust sales at Marks & Spencer Simply Food franchise operations.

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

Continental Europe revenues disappointed, growing 9 percent to £1.2 billion, due to industrial action, lower-than-expected demand during the Paris Olympics and weak performance from the German motorway services arm.

SSP’s total underlying revenue still grew by 17 percent to £3.4 billion, while pre-tax profits rose by more than a third to £119 million.

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, CEO of SSP, said the company has “strong fundamentals and benefits from the continued long-term growth trends of the global travel market.”

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

For the full year, the company expects turnover to rise to £3.7 billion to £3.8 billion and operating profit to be between £230 million and £260 million.

SSP hopes to double operating margins in its European operations to around 3 percent over this period, followed by 5 percent in the medium term.

Coveney added: ‘As we reach the next stage of our post-Covid evolution and with strong underlying growth across the group, our focus is now on driving greater value from a strengthened foundation.

“In continental Europe, we are accelerating our profit recovery plan, especially by realizing returns from the significant number of recently renewed and extended contracts.”

Formerly owned by catering giant Compass Group, SSP has around 3,000 branches at airports and train stations in 37 countries.

In addition to its own brands such as Upper Crust, the company operates franchises on behalf of household names such as Leon, Starbucks, Burger King and Yo! Sushi.

Analysts at Shore Capital said: ‘The key for us is that SSP can both demonstrate profitable revenue growth and improve free cash flow.

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