SSP Group shares fell on Friday despite saying it was on track to grow full-year earnings by around 18% and launched a £50m share buyback as strength in the UK and Europe offset a hit to passenger numbers from the Middle East conflict.
The travel food and drink operator, which runs outlets in airports and railway stations, said like-for-like sales rose 4% in its fourth quarter, with full-year revenue up 5% to about £3.8bn.
It expects earnings per share of around 14p for the year to 30 September, up about 18% and in line with expectations.
Improved cash generation and lower debt laid the foundation for a new buyback of up to £50m.
The standout was the UK and Ireland, where like-for-like sales jumped 9% on strong summer trading. Continental Europe, where SSP has been turning around its French and German operations, saw its operating margin rise towards 3% from 2.2%.
Its Asia Pacific and Middle East region, however, continued to feel the effects of the conflict that began in February, with passenger numbers down, though trading in the Gulf has rebounded to around 90% of prior-year levels.
The dip in shares this morning seems a bit harsh, but there are forecasts of softer operating profit.
Operating profit is expected to come in slightly below plan at about £230m, affected by softer North American passenger numbers over the summer, with earnings supported by lower minority interests and tax charges.
Chief executive Patrick Coveney said the business’s diversification left it well placed to deliver despite the disruption. SSP reports full-year results on 8 December.
Patrick Coveney said: “We have delivered a resilient Q4 trading performance in a challenging environment. Despite the significant impact of the Middle East conflict on passenger volumes in APAC & EEME, the strength and diversification of our portfolio leaves us well-positioned to deliver group earnings per share for the year in line with current market expectations.
“Through our ‘Focus26’ plan, we have driven sustainable improvements in operational performance across the Group. Notably, we are making good progress turning around performance in France and Germany. We expect to deliver a step up in operating margin for the year in the region as a whole to c.3% and are setting the region up for continued growth in margin and cash generation.”