SSP shares surge as earnings prime £200m regardless of European disruption

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

The food service firm, which also owns Caffè Ritazza, revealed operating profits climbed by 32 per cent to £206million in the year ending September, following strong results across all regions except Continental Europe.

Underlying revenues across the UK and Ireland increased by 15 per cent to £893million amid rising air passenger numbers, a continued rebound in commuters, and fewer strikes by rail workers.

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

At the same time, its North American sales jumped by over a quarter at constant currency levels to £814million thanks to takeovers, including Midfield Concessions Enterprises, and outlets opening in cities like Seattle and Chicago.

Continental European revenues disappointed with growth of 9 per cent to £1.2billion, amid industrial action, lower-than-expected demand during the Paris Olympics, and a weak performance by its German motorway services arm.

Bumper performance: SSP Group shares soared on Tuesday after the Upper Crust owner reported a significant leap in annual profits

SSP’s total underlying turnover still expanded by 17 per cent to £3.4billion, while its pre-tax profits leapt by over a third to £119million.

SSP Group shares surged 11.5 per cent to 180.7p, making them the FTSE 250 Index’s third-best performer behind Victrex and Discoverie Group.

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

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

For the full year, it forecasts revenues increasing to between £3.7billion and £3.8billion and operating profits hitting £230million to £260million.

SSP hopes to double the operating margin in its European business to around 3 per cent during the period, followed by 5 per cent over the medium term.

Coveney added: ‘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.

‘In Continental Europe, we are accelerating our profit recovery plan, in particular by building returns from the significant number of recently renewed and extended contracts.’

Formerly owned by catering services giant Compass Group, SSP runs about 3,000 outlets in airports and railway stations across 37 countries.

Along with its own brands like 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 to us is SSP being able to demonstrate both profitable topline growth and improving free cash generation.

‘Here, we see encouraging progress from today’s update and commend management for a materially improved investment script.’