SSP Group (LON:SSPG) reported higher first-half revenue and a return to positive earnings per share, as management said its Focus '26 plan is beginning to support profitability, cash generation and returns despite pressure from disruption in the Middle East.
Group CEO Patrick Coveney said SSP delivered a “resilient first half performance” and made “tangible progress” against each element of its strategy. Group CFO Geert Verellen said revenue rose 6% to £1.8 billion, including 5% like-for-like sales growth, while underlying operating profit increased 18% to £50 million. The underlying operating margin expanded by 30 basis points at constant exchange rates.
Verellen said earnings per share improved to £0.011, compared with a loss of £0.004 a year earlier, helped by higher operating profit, increased income from associates, lower minority interests and reduced financing costs following refinancing transactions last year. SSP proposed an interim dividend of 1.6 pence per share, consistent with its dividend policy.
Sales Growth Supported by U.K., APAC and EMEA
SSP said first-half sales growth was supported by strong trading in the U.K. and Ireland and in Asia Pacific and EMEA, along with improving momentum in North America toward the end of the period. Verellen said North American like-for-like growth recovered late in the half, helped by increased dwell times linked to airport security disruptions and spring break travel.
Like-for-like sales for the group were 3% in the first six weeks of the second half. Verellen said trends were stable across most of the business, but passenger numbers in key hubs across Asia Pacific and into Eastern Europe contracted, leading to a 4% decline in like-for-like sales in the APAC and EMEA region during that period.
Coveney said the company’s diversified portfolio and flexible operating model were providing resilience. He said more than 80% of the business, mainly in North America, the U.K. and Continental Europe, had so far seen passenger numbers and spending levels “largely unaffected” by the Middle East disruption.
Middle East Conflict Weighs on Regional Trading
Coveney said SSP has 2,350 colleagues in the directly impacted Middle East region and thanked teams in Abu Dhabi, Saudi Arabia, Egypt and Cyprus for their efforts to keep employees, clients and units safe.
He said the Gulf markets, which represent about 2% of group sales, have been trading at approximately 60% of prior-year levels since April and early May. SSP has also seen lower flights into surrounding Eastern Mediterranean and Asian regions, which together represent about 14% of group sales. Those areas moved from 14% like-for-like growth in the first half to broadly flat trading so far in the second half.
Management said visibility remains limited and uncertain, and SSP is focusing on profit protection plans in directly affected regions while accelerating Focus '26 initiatives across the group.
Continental Europe and Rail Reset Take Priority
SSP highlighted Continental Europe as a key area of operational improvement. Verellen said operating losses in the region fell 32% to £9 million, while the operating margin improved by 70 basis points. He said the company remains confident that Continental Europe will end the year with an underlying operating profit margin above 3%.
Coveney said improving returns from European rail is a central part of the plan. Following a review, SSP ruled out a complete or immediate exit from the channel because the cash costs would have been “prohibitive.” Instead, the company is negotiating, in consultation with employee bodies, to exit roughly one-third of its European rail estate, or about 110 units, where economics are structurally challenged.
SSP plans to retain a smaller core estate focused on larger, higher-density stations and higher-returning formats such as quick-service restaurants, bakery and retail. Coveney said the average sales density of the remaining estate would rise by 25%, while capital expenditure deployed into the channel is expected to be about half the previous level.
Benefits from the rail reset are expected to begin in fiscal 2027 and build through fiscal 2028, with the full effect reflected in fiscal 2029, Coveney said during the question-and-answer session.
Regional Performance Shows Mixed Trends
In North America, Coveney said SSP has shifted from rapidly expanding its airport footprint to more balanced growth, including like-for-like sales in the existing estate and selective new airport additions. He said the company now operates in about 60 airports, up from just over 30 at the start of 2022.
The region also reduced non-customer-facing roles by 11% year over year and lowered its minority interest charge by 40% in the half. Coveney attributed that to changes in regulation, more targeted partner participation in existing airports and a sharpened cost allocation framework with equity partners.
In the U.K. and Ireland, Verellen said underlying operating profit decreased to £22 million, affected by positive one-off items in the prior year and higher depreciation. Coveney said the region nevertheless traded well, particularly in air, while M&S units posted double-digit like-for-like sales growth across the format.
In APAC and EMEA, Verellen said profitable sales growth in Australia and Egypt was partly offset by the deconsolidation of some Indian units, whose results are now reported through associates. Coveney said the ARE acquisition in Australia and the TG acquisition in Indonesia are tracking ahead of business case.
Cash Flow, Capital Allocation and Outlook
SSP reported a first-half free cash outflow before dividends and buybacks of £176 million, compared with an outflow of £117 million a year earlier. Verellen said lower capital expenditures and lower tax payments were offset by higher financing costs and the timing of minority interest cash outflows. Net debt to EBITDA was 2.2 times, unchanged from the same point last year.
Management said working capital outflows reflected normal seasonality and planned one-off items, including reduced use of supply chain financing, delayed payments to M&S following a prior cyber incident, receivables in India, rent deposits tied to a tender at Noida airport and the gradual exit from German motorway services.
Verellen said SSP expects to generate a working capital inflow for the full year and, assuming a stable operating environment in the second half, deliver more than £100 million of free cash flow before dividends and buybacks. Capital expenditures were £93 million in the first half, and SSP expects full-year capex to be below £200 million.
SSP said its share buyback launched last October remains ongoing. Verellen said the company had used about £57 million by early in the week of the call to buy about 4% of outstanding share capital.
Based on the current operating environment, Coveney said SSP expects fiscal 2026 earnings per share within the current market expectations range of £0.136 to £0.148, compared with £0.119 in fiscal 2025. He cautioned that a deterioration in conditions, including renewed large-scale conflict in the Gulf, a substantial decline in aviation fuel availability or a marked softening in consumer travel sentiment, would require the company to revisit its assumptions.
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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