UPDATE 3-Airport food outlet operator SSP raises 2024 on air travel boom
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Sees higher 2024 sales and profit
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Resumes dividend
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Eight-week revenue up 22%
(Adds analyst comment in paragraph 10, updates share move)
By Prerna Bedi
Dec 5 (Reuters) - SSP Group, which operates food outlets at airports and train stations around the world, raised its 2024 profit guidance and resumed dividend payments on Tuesday after a rebound in air travel and as passengers spend more on food.
Shares in SSP, owner of coffee shop chain Upper Crust and a Starbucks franchise in the UK, were up 3.8% at 220.6 pence by 1038 GMT after falling nearly 10% this year through Monday's close.
The company announced a dividend of 2.5 pence apiece. It suspended dividends in 2020 after the pandemic hit and it entered funding agreements that restricted it from paying returns to shareholders.
The company said it was benefiting from higher average spend per customer, price hikes and contract gains, with revenue in the first eight weeks of its new financial year that began on Oct. 1 up 22% year-over-year.
"In general data suggests that people or consumers who travel and particularly on leisure travel are still spending more," CEO Patrick Coveney told Reuters.
He said SSP's businesses in the Middle East have not been impacted by the ongoing Israel-Hamas conflict.
SSP, which also owns the Ritazza coffee shop chain, said sales for 2024 are expected to come in between 3.4 billion pounds and 3.5 billion pounds ($4.29 billion and $4.42 billion), up from 3.01 billion pounds logged for 2023.
Underlying core profit is forecast to be in the range of 345 million pounds-375 million pounds, compared with 280 million pounds for the full year ended Sept. 31.
Analysts on average expect 3.4 billion pounds in sales and 353 million pounds in profit for 2024, according to a company-compiled consensus.
"With travel still recovering and strong pricing power continuing, we expect growth to continue into FY24E and for inflationary pressures to be managed," analysts at Liberum said in a note.
Around 66% of SSP's total sales came from airports, while 28% came from rail stations, according to its 2022 annual report.
($1 = 0.7923 pounds) (Reporting by Prerna Bedi in Bengaluru; Editing by Rashmi Aich, Nivedita Bhattacharjee and Susan Fenton and Miral Fahmy)
