What SSP Group (SSPG) Said on Its Q4 Earnings Call

Key Points

• SSP’s Q4 sales rose 4% on a constant-currency basis, with strong 9% like-for-like growth in the U.K. and Ireland offsetting weaker passenger volumes in parts of Asia, India and the Eastern Mediterranean.
• The company remains on track for fiscal 2026 earnings per share of about £0.14, though operating profit is expected at approximately £230 million, slightly below its original plan. Lower minority-interest and tax charges are expected to support earnings.
• SSP lowered its fiscal 2026 free-cash-flow forecast to about £70 million after choosing not to increase supply-chain financing, but announced a £50 million share buyback as leverage improves and European margins are expected to rise.

SSP Group LON: SSPG said fourth-quarter sales rose 4% on a constant-currency basis, supported by 4% like-for-like growth, as strong trading in the U.K. and Ireland helped offset passenger-volume disruption in parts of Asia and the Eastern Mediterranean.

Group Chief Executive Patrick Coveney said the travel food-and-beverage operator remains on track to report fiscal 2026 earnings per share of approximately £0.14, representing an 18% year-over-year increase at actual exchange rates and in line with market expectations. The company expects operating profit of about £230 million, slightly below its original plan, while lower minority-interest charges and a lower-than-expected tax charge are expected to support earnings per share.

Regional performance reflects uneven travel conditions

SSP said passenger traffic continued to be affected by the Middle Eastern conflict, with disruption extending across the Eastern Mediterranean, Asia-Pacific and India. Coveney said the group’s diversified portfolio helped absorb those pressures, particularly through a strong contribution from the U.K.

• North America: Sales increased 4%, including 2% like-for-like growth. Coveney said U.S. passenger volumes were weaker than anticipated during the summer, with Transportation Security Administration data showing declines of roughly 2% to 3% year over year. SSP said it outperformed market conditions through sales-growth initiatives.
• Continental Europe: Sales were flat, while like-for-like sales increased 3%. The company completed its exit from the German motorway service business during the quarter and said its European rail restructuring plan remains on track.
• U.K. and Ireland: Like-for-like sales rose 9%, driven by strong peak-summer trading and customer proposition improvements at airports and rail stations.
• Asia-Pacific, India and EEME: Sales increased 8%, driven by net contract gains, while like-for-like sales rose 1%. Passenger volumes in Gulf markets improved sequentially to 90% of prior-year levels, but traffic remained pressured in neighboring travel corridors.

Coveney said the impact of the regional disruption had been most pronounced outside the Gulf, particularly in Asia, India and Eastern Mediterranean markets that had recorded strong first-half like-for-like growth. He also cited disrupted flight routes and higher aviation fuel costs as factors affecting travel activity.

U.S. profit pressure to be offset by lower minority interests

While North American operating profit is expected to be lower than previously anticipated, SSP said it expects to offset that impact through lower and more sustainable minority-interest charges, principally in the U.S.

The company has been changing its joint-venture model through revised arrangements with partners, new contracts with more targeted and generally lower partner participation, and refinements to its ways of working. Coveney said these steps are intended to improve the conversion of operating profit into net income attributable to shareholders.

Chief Financial Officer Geert Verellen said the company would provide further detail on the composition and sustainability of these changes when it reports full-year results in December.

Cash flow outlook lowered after supply-chain financing decision

SSP now expects free cash flow after interest of approximately £70 million for fiscal 2026, below its prior guidance of £100 million. The revision follows a decision not to draw additional supply-chain financing facilities year over year, despite having more than £70 million of undrawn capacity available.

Verellen said the decision followed shareholder feedback and meant the company would use the same level of supply-chain financing as in the prior year. He said the £70 million forecast nevertheless represents an underlying year-over-year cash-generation improvement of roughly £150 million.

SSP generated around £80 million of free cash flow before dividends in the prior year, but that figure was supported by £154 million from the start of its supply-chain financing program, according to Verellen. Excluding that financing effect, he said prior-year free cash flow would have been about negative £70 million.

The company expects capital expenditure of £170 million for the year. Verellen said the figure reflects a combination of project timing, capital contributions collected from business partners and management of the timing of committed investment projects. SSP plans to target capital expenditure at roughly 5% of sales in future years to support growth and portfolio renewal.

Verellen also said the £70 million free-cash-flow figure includes cash exceptional items, although the final amount remains to be determined and is expected to be lower than the prior year. He said SSP’s long-term objective is for working capital to become a source of funding, as it seeks to unlock cash and improve operational processes.

Buyback announced as Europe margins improve

With leverage expected to move toward the lower end of SSP’s medium-term range, the company announced a new £50 million share buyback. Verellen said the program forms part of a broader capital-allocation approach that also includes capital expenditure and a dividend policy of distributing 30% to 40% of annual net income.

SSP said its Focus26 program is improving operating performance, cash generation and returns on capital. The company expects group return on capital to rise above 20% and be sustained at that level.

In Continental Europe, SSP expects operating margin to improve to approximately 3% in fiscal 2026 from 2.2% in fiscal 2025. Coveney said the company remains focused on lifting the region toward its medium-term margin target of more than 5%.

He said the European rail restructuring is substantially complete in terms of planned unit closures, station restructuring and rent renegotiations across France and Germany. SSP expects the benefits to become more visible in fiscal 2027 and 2028. The company will provide fiscal 2027 guidance with its preliminary full-year results in early December.

About SSP Group (LON:SSPG)

SSP is a leading operator of food and beverage outlets in travel locations worldwide, with c.37,000 colleagues in over 600 locations across 36 countries. We operate sit-down and quick service restaurants, cafes, lounges and food-led convenience stores, principally in airports and train stations, with a portfolio of more than 550 international, national and local brands. These include our own brands (such as UrbanCrave, which brought the first "street eats" concept to airports in the US, Nippon Ramen, a noodle and dumpling concept in the Asia Pac region, and Juniper, a premium bar in the UK) as well as franchise brands (such as M&S, Starbucks and Burger King).

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