​SSP's Strong Recovery Spurs Dividend Return

In a remarkable rebound from the pandemic, SSP Group has announced the resumption of dividend payments, signifying a robust recovery in travel-related demand. The catering giant, specialising in airport and railway services, acknowledges ongoing macroeconomic and political challenges but remains optimistic about the future of travel and its growth potential.

Steffen Zahn from Berlin, Germany, CC BY 2.0, via Wikimedia Commons

Despite an increase in net debt to £392 million, up by £100 million, this figure surpasses market expectations, anticipating a debt of £500 million. A notable surge in underlying earnings, from £142 million to £280 million, reflects the resilience of the global travel sector, counterbalancing the impact of currency fluctuation. Similarly, pre-tax profits have soared from £25 million to £88 million.

A significant boost in annual revenue, reaching £3 billion (up 38% from the previous year), surpasses pre-pandemic levels. This growth is largely attributed to a 24% increase in North America and a 44% increase in Asia and Europe in the latter half of the year. These positive developments have enabled SSP to reward its shareholders with a final dividend of 2.5p per share.

Shore Capital analyst Greg Johnson remarks on SSP's strategic moves towards a normalising capital allocation framework, highlighting the company's ability to support both expansion and shareholder returns. SSP, once a part of Compass Group, was acquired by EQT Partners in 2006 and made public on the London Stock Exchange in 2014.

SSP manages around 2,900 outlets across 37 countries, employing 42,000 staff. It boasts a diverse portfolio of brands, including Upper Crust, Caffè Ritazza, and partnerships with Burger King and Starbucks. The company's expansion continues, with new markets in Italy, Iceland, and Saudi Arabia, and sustained high contract retention rates at key locations.

SSP anticipates a revenue increase of £450 million from upcoming ventures, including collaborations with BrewDog and Breakfast Club. The company has witnessed a 22% revenue increase in the current year, with solid performance in North America and the UK.

Stuart.coombes, CC BY-SA 3.0, via Wikimedia Commons

For the upcoming year, SSP forecasts 6% and 10% sales growth, with revenues expected to hit £3.4 billion to £3.5 billion. These projections, alongside planned capital expenditures of £280 million, underscore SSP's strategy to navigate inflationary pressures and expand further in key markets like North America and Asia Pacific.

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