SSP Group expects FY EPS in line with estimates, launches £100m buyback

Investing.com -- SSP Group PLC (LON:SSPG), a leading operator of food and beverage outlets in travel locations, announced Thursday it expects to deliver full-year earnings per share in line with market expectations despite slowing passenger growth in the second half.

The company also launched a £100 million share buyback program, reflecting confidence in its future prospects.

SSP reported fiscal year 2025 revenue of approximately £3.7 billion, up about 8% YoY on a constant currency basis, with operating profit expected to be around £230 million, an 11% increase.

The company anticipates full-year EPS of approximately 11.5p at actual exchange rates, representing a 15% YoY increase, benefiting from a lower-than-expected tax rate and interest charge.

"We have delivered a resilient Q4 performance against an unsettled macro-economic and softer demand environment in some of our key travel markets," said Patrick Coveney, CEO of SSP Group. "Our UK and Asia Pacific businesses have traded particularly well and, taken in aggregate, our performance in the quarter across the portfolio leaves us on track to deliver earnings per share for FY25 in line with current market expectations."

Fourth-quarter revenue grew 4% YoY on a constant currency basis, below analyst expectations of 6%, with like-for-like sales up 2% versus consensus of 4%. Performance varied by region, with UK & Ireland and Asia Pacific outperforming expectations, while Continental Europe and North America fell short.

"Over the long term, we expect continued strong growth in Travel Retail, driven by further globalisation and growth in airport retailing capacity. We note a strong space growth story at SSP, although much of the expansion has been focused on the US, where the outlook for the travel segment looks
tougher near term," according to RBC analysts. 

RBC also noted that it expects European margins to gradually improve from a low base as SSP continues restructuring its business. While cost pressures, particularly from labor, and emerging market currency exposure remain risks, the bank highlighted potential for operational leverage over time, supported by a stronger focus on digital tools and data utilization.

The company noted challenges in its Continental Europe segment, particularly in France and Germany, where operating profit margin is expected to be around 2.0% for FY25, below its original target of 3%. SSP plans to improve this to over 3% in FY26 through cost reductions, rent restructuring, and reduced capital spending.

SSP expects leverage (Net Debt/EBITDA) to improve to approximately 1.6x at year-end from 2.2x at the half-year mark, driven by strong free cash flow generation. For fiscal year 2026, the company anticipates delivering EPS within the current range of market expectations of 12.9p to 13.9p on a constant currency basis.