SSP Group Raises Guidance, Speeds Expansion Plans After Strong Summer
By Geoffrey Smith
Investing.com -- Shares in SSP Group (LON:SSPG) surged at the opening on Tuesday after the group said the post-pandemic recovery in tourism continued to drive a strong recovery in revenue and profit through the end of its fiscal year.
SSP said in a pre-close trading update that it now expects revenue for the 12 months through September of 2.17 billion pounds ($2.33 billion), and earnings before interest, taxes, depreciation and amortization of 140 million pounds, slightly ahead of its previous guidance, around 8% ahead of expectations according to analysts at Goodbody.
SSP, which operates food and drink outlets concentrated in airports and other travel hubs, was badly hit by the pandemic and the collapse in passenger numbers. However, the tourism sector has roared back to life this year, as consumers quickly got back into the habit of vacationing.
The group said it generated a free cash flow of 70 million pounds in the second half alone, allowing it to bring net debt down to 340 million pounds, or around 2.4 times EBITDA.
Despite this, revenue in the final quarter of the year was still down 9% from pre-pandemic levels, owing to a slower recovery in business and commuter travel that suggests that the switch to remote working during the pandemic may have done some long-lasting damage to its business.
The group was nonetheless confident enough about its outlook to speed up a program of store openings that it reckons will add over 500 million pounds a year in annual revenue by 2025, relative to 2019 levels. It will increase capital expenditure to as much as 250 million pounds next year from around 150 million in the year just ending.
By 03:30 ET (07:30 GMT), SSP shares were up 4.4%.
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