The collapse of European airlines such as Air Berlin and Monarch towards the end of last year may have made life difficult for travellers, but it doesn’t appear to have put them off buying snacks. Travel concessions operator SSP (SSPG) reported a 2.8 per cent increase in like-for-like sales growth, driven mainly by the air sector. Net contract gains amounted to 7.1 per cent over the half-year, driven by new unit openings and a high customer retention rate.
But for such a low-margin affair, perhaps the most encouraging metric was a 50 basis point increase in the underlying operating margin at constant currencies. Including the impact of acquisitions, the combined group rate came in at 4.7 per cent – still not much room for error there. But SSP is working with some of its partners, such as Starbucks, to develop premium products in a bid to bolster the margin.
The group hailed a 62 per cent increase in net operating cash flow from the 2017 half-year, while the net free cash outflow fell to £6.5m from £46.5m a year earlier. That represents progress of sorts, but with net debt on the rise it still seems curious that management felt able to hike the dividend by 50 per cent.
Analysts at Numis expect pre-tax profits of £169m in the year to September, giving EPS of 23p, compared with £149m and 20p in FY2017.
| SSP (SSPG) | ||||
| ORD PRICE: | 634p | MARKET VALUE: | £2.94bn | |
| TOUCH: | 634-635p | 12-MONTH HIGH: | 692p | LOW: 455p |
| DIVIDEND YIELD: | 1.2% | PE RATIO: | 41 | |
| NET ASSET VALUE: | 86p* | NET DEBT: | 62% | |
| Half-year to 31 Mar | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2017 | 1.07 | 33.0 | 3.8 | 3.2 |
| 2018 | 1.18 | 48.4 | 5.6 | 4.8 |
| % change | +10 | +47 | +47 | +50 |
| Ex-div: | 31 May | |||
| Payment: | 29 Jun | |||
| *Includes intangible assets of £720m, or 155p a share | ||||
