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Investing.com -- Shares of SSP Group PLC (LSE:SSPG) climbed 4.5% as the company reported a 14% increase in constant currency (cc) revenues for the first quarter of 2025, continuing the positive momentum from the fourth quarter of 2024. The growth was driven by a combination of like-for-like (LFL) sales growth of 6% and net contract gains of 5%.
The company's performance varied by region, with North America leading the way with a 17% revenue increase, attributed to a 3% growth in LFL and an 8% boost from net contract gains. Continental Europe saw a modest 5% increase, with both LFL growth and net contract gains contributing equally at 3%.
The Asia Pacific and Emerging Eastern Europe, Middle East, and Africa (APAC & EMEE) regions experienced a significant revenue jump of 41%, with LFL growth of 14% and net contract gains of 13%. The UK market reported a 9% increase in revenue, solely due to LFL growth, as net contract gains remained flat.
SSP Group's outlook for the fiscal year 2025 remains unchanged, anticipating a revenue growth of approximately 8-10% in constant currency terms. This forecast includes around 4-5% from LFL sales, approximately 4% from net contract gains, and about 2-3% from mergers and acquisitions, offset slightly by a 2% impact from the exit of the German MSA and the TFS joint venture.
The company expects earnings before interest and taxes (EBIT) to be between £230 million and £260 million, with earnings per share (EPS) projected at 11.5-13.5 pence. Current exchange rates suggest a slight negative impact on revenues and EBIT, leading to an adjusted EBIT forecast range of £228 million to £258 million. This aligns closely with the consensus estimate of £243 million.
The planned initial public offering (IPO) of SSP's Indian joint venture, TFS, is progressing as expected, with completion targeted for the Spring. This move is anticipated to provide a potential valuation catalyst for SSP Group.
Jefferies, a financial services company, commented on SSP Group's performance, stating, "After a period of EPS downgrades, we do not expect a material change to underlying consensus estimates. That 2H24 momentum has continued through 1Q should provide reassurance, with high return regions outperforming and the potential valuation catalyst of the JV in India seeking an Indian Stock Exchange listing in the Spring.
We had previously commented that a positive inflection in the forecast EPS trajectory would likely be required to drive the share price."
Investors appear to have responded positively to the company's first-quarter performance and steady guidance, as well as the progress of the TFS IPO, which could unlock additional value for the group.
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