SSP Group, which operates food outlets at airports and train stations around the world, raised its 2024 profit guidance and resumed dividend payments today 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% today after falling nearly 10% this year through up to Monday's close.
SSP 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 October 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 and £3.5 billion, up from £3.01 billion logged for 2023.
Underlying core profit is forecast to be in the range of £345-375m, compared with £280m for the full year ended September 31.
Analysts on average expect £3.4 billion in sales and £353m 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.
