Deutsche Numis part 19 Oct 2025 12:15
SSP Group {Ticker: SSPG.L, Closing Price: 166.60 GBp, Target Price: 262.00 GBp, Recommendation: Buy}
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Given the wealth of KPIs offered, there are inevitably good and bad points. Despite a slower Q4 (2% from 3% lfl) the group will achieve EPS in line with market expectations in FY25. In reiterating that it expects FY26 to be in line with expectations and launching a new 8% share buyback it is, in effect, raising the prospect of 25% EPS growth next year.
Q4 summary
In Q4, lfl sales grew +2% vs +3% in Q3 and 5% in 1H. Sales were impacted by a moderation of PAX, esp in the US and India. 12m lfls were c.4% compared to long-standing guidance of 4-5%.
Regionally, the RoW and the UK were the best performers (lfls both +6%) with Europe continuing to lag (+1%) owing to weak demand in France and Germany.
Net new business contributed 3% in Q4 vs 4% in Q3 (DBe 4.3%). Together that gave organic revenue growth of 4% and FY revenue of £3.6bn vs the £3.6-3.7bn guided range (actual FX).
FY guidance: FY25 is in line with planning assumptions. At the EBIT line, £220m at constant FX is at the low end of £220-250m range owing to a lagged European turnaround. However, with beats on int and tax, EPS is guided to 11.5p, the midpoint of 10.8-12.8p guidance (Bloomberg 11.3p).
Net debt is better than expected at c.£600m vs DBe £616m meaning that leverage of 1.6x is now comfortably within the 1.5-2.0x target range. Consequently, a £100m buyback is launched, equivalent to 7.5% of current market cap.
For FY26, cost reduction plans mean the group reiterates current expectations for EPS in the range 12.9-13.9p (Bloomberg median 13.5p).
Analyst call highlights
The call focused on factors driving a softer lfl in Q4. Actually, the only region with a sequential slowdown was APAC&EEME, where lfl was 6% from 9%. In India, temporary reductions in capacity following the Air India accident are now coming back into service, helping lfl momentum. That said, SSP Americas has been impacted by fewer international passengers. Finally, weak consumer sentiment is continuing in France/Germany.
European turnaround remains a key focus but delivery was impacted by macro. Measures here include additional cost reductions, substantial rent restructuring and further reduced capital spend.
Strategy: When asked explicitly about potential to sell down TFS shares to capture value not reflected in the group valuation, nothing was ruled out. Mgt was pleased with the IPO process and wants to “demonstrate value” in the whole of SSP. It will continue to “track all options” interestingly not dismissing a sale out-of-hand.
BB/Forecasts: The new £100m buyback seems to reflect conviction in the improved cash dynamics in the business. The CFO has a particular focus on working capital and lower capex. He clarified that the accretion from a lower share count is NOT baked into the 12.9-13.9p EPS guidance for next year. Depending how quickly the cash is re
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