SSP stock jumps after reporting solid full-year results

Investing.com -- Shares of SSP Group Plc (LON:SSPG ) jumped over 11% on Tuesday following its full-year results, which came in line with expectations and reaffirmed confidence in its growth trajectory. 

The travel food and beverage company reported FY24 earnings per share of 10.0p, matching consensus estimates and guidance. 

“We note a good start to FY25 and we expect growth this year to be supported by a still strong pipeline of space coming on line,” said analysts at RBC Capital Markets in a note. 

The company recorded FY sales of £3.4 billion and a pre-IFRS-16 EBITDA of £343 million, aligning closely with market forecasts. 

A full-year dividend of 3.5p was also announced, meeting expectations. SSP’s net debt stood at £593 million at the year-end, slightly better than analysts' projections, adding to the optimistic sentiment surrounding the results.

Regional performance was mixed, with the UK beat profit expectations, while Continental Europe and the Asia-Pacific regions were slightly weaker than anticipated. North America’s performance aligned with forecasts. 

Early trading data from FY25 painted a promising picture, with revenues for the first eight weeks showing 13% year-over-year growth in constant currency terms, supported by a like-for-like sales increase of 5%.

For FY25, SSP is guiding to sales in the range of £3.7-3.8 billion on a constant currency basis and pre-IFRS-16 operating profit of £230-260 million. 

At current exchange rates, this translates to EPS guidance of 11-13p, in line with consensus estimate of 12.1p. 

The guidance incorporates the effects of the recent joint venture in India with Adani Airports, which includes the deconsolidation of SSP's TFS Mumbai operations. 

RBC analysts believe the JV could unlock growth potential in the rapidly expanding Indian aviation market.

The company's five-point recovery plan for Continental Europe, including streamlining operations and cost reductions, was another focal point. 

The company has set a medium-term target of improving operating margins in the region to 5% from 1.5% in FY24.

“Although cost pressures remain (most notably from labour) and EM currency exposure remains a risk, we see potential for operational leverage to come given an increased focus on digital and data usage, and we expect Continental European margins to improve from here, given new leadership in this region,” RBC said.

Source: Investing.com