FTSE 250 movers: Investors get a taste for SSP; Direct Line slips
By Frank Prenesti
Date: Wednesday 10 Jul 2024
(Sharecast News) - FTSE 250 (MCX) 20,850.92 1.00%
Shares in SSP Group surged on Wednesday as the airport and train station food outlet operator held annual guidance after third quarter sales rose 16%, driven by increasing demand for leisure travel.
The company, which owns the Upper Crust and Ritazza coffee chains, said it still expects revenue of £3.4-£3.5bn, underlying core earnings of £345-£375m and underlying operating profit in a range of £210-£235m. Like-for-like revenue was up 6%.
North America sales grew 27% year-on-year on a constant currency basis, including a 14% benefit from the acquisitions of Midfield Concessions and Mack II in the US and ECG in Canada, the company said in a trading update.
Continental Europe sales were up 7% and 12% in the UK, with like-for-like performance up 8%, reflecting good passenger numbers in the air sector and fewer rail strikes compared with last year.
In Asia-Pacific and EEME, sales rose by 33%, driven by increasing passenger numbers, and a benefit from the ARE acquisition in Australia, which completed in early May this year.
The company also said it would work with the rail watchdog on recommendations contained in a report on its the retail market inside train stations, where SSP has a dominant presence.
Britain's rail regulator last month recommended that catering outlets with leases due to expire should be put to competitive tender with simpler and standardised contracts introduced for new entrants, but stopped short of referring the industry to competition authorities.
Most railway station catering space is leased to London-listed SSP Group which owns the Upper Crust, Ritazza and the Camden Food Co, while it also operates franchises for Burger King, Greggs, Starbucks and M&S Food, the ORR said in its initial findings last year.
SSP was found to own 20-30% of all outlets, bringing in 30-40% of all rents paid by station catering companies with a 40-50% share of all passenger spending.
Its share of all outlets is larger than that of the next six largest players combined. Costa Coffee and WH Smith are the next largest players, the ORR report said, with one competitor saying SSP's position was "verging on monopoly in many locations".
Travis Perkins announced the appointment of Pete Redfern as its new chief executive officer on Wednesday, and Geoff Drabble as chair designate, in two big changes to its leadership team.
The FTSE 250 company said Redfern would assume his role as CEO on 16 September, succeeding Nick Roberts.
It said he would bring more than 20 years of experience in the construction sector, having previously served as group chief executive of Taylor Wimpey for 14 years.
During his tenure, he transformed Taylor Wimpey into one of the UK's largest housebuilders and led its ascent to the FTSE 100.
Redfern's experience included restructuring the company post-merger, strengthening its financial position following the global financial crisis, and driving significant shareholder value through a focus on organic growth.
He was also familiar with Travis Perkins, having served as a non-executive director on its board for nine years until last September.
"Pete brings a combination of deep sector knowledge, operational delivery capability, commercial acumen and listed company expertise," said interim chair Jez Maiden.
"He is focused on operational rigour and driving a performance culture, prioritising customers, quality and people.
"He has demonstrated his skills in managing costs, margins and cash generation, complemented by a rigorous approach to capital allocation."
Maiden said Redfern was joining at an "important time" for the group, as it focussed on improving profitability and enhancing cash generation, as well as accelerating changes to its operating model to create a simpler, more efficient business.
"I am confident that, together with Duncan Cooper, chief financial officer, the executive leadership team will accelerate the ongoing transformation of the group and deliver strong shareholder returns."
Geoff Drabble would meanwhile join Travis Perkins as a non-executive director on 1 October, taking on the role of chair designate.
The board said Drabble would bring a wealth of experience from his roles in publicly-listed companies within the building materials distribution, equipment hire, and tools markets.
He currently chairs Ferguson and DS Smith, and previously served as a non-executive director of Howden Joinery Group.
Drabble's executive experience included his tenure as group chief executive of Ashtead Group from 2006 to 2019, and senior roles at Laird Group and Black and Decker Corporation.
"Geoff brings a deep and relevant skill set to the board, particularly with respect to building materials distribution and equipment hire," Jez Maiden added.
"He has been successful at the most senior executive and non-executive levels, and I am pleased that he is joining us as a non-executive director and chair designate."
Wetherspoons has said it expects profits to hit market expectations as it closes out its financial year with strong sales momentum.
The pubs group reported like-for-like sales growth of 5.8% in the 10 weeks to 7 July, picking up slightly from the 5.3% LFL increase reported in the third quarter.
Total sales are said to be at record levels despite the group operating fewer locations, having opened two sites but sold or surrendered to the landlord 26 pubs during the financial year. Some 10 trading pubs remain on the market or are under offer, giving the company a trading estate of 801 pubs.
"Sales per pub are approximately 21% higher than pre-pandemic levels, which has helped to compensate for the very substantial increase in costs," said chairman Tim Martin.
Compared with the financial year ended July 2019, labour costs are £164m higher, while energy costs have increased £28m.
"Notwithstanding these cost pressures, the company continues to endeavour to 'widen the moat' by investing in areas such as beer gardens, staff rooms, above-bar glass racks and improved beer dispense systems," Martin said.
Wetherspoons' annual results for the fiscal year ending 28 July will be announced on 4 October.
Crest Nicholson said on Wednesday that it was "minded" to recommend Bellway's revised £720m takeover offer, pushing shares in the housebuilder higher.
Bellway submitted a third non-binding offer earlier this month, valued at 273p per share, after two earlier proposals were rejected for undervaluing the business.
Under the terms of the latest approach, Crest Nicholson shareholders would receive 0.099 shares in Bellway for each one they own in Crest Nicholson, as well as a divided of 4p per share.
Crest Nicholson acknowledged that the revised proposal remained subject to a number of pre-conditions, including due diligence.
But it added: "The board has confirmed to Bellway that the revised proposal is at a value that it would be minded recommend unanimously to...shareholders, should a firm intention to make an offer be announced."
The deadline for Bellway to make a formal offer under Takeover Panel rules - a so-called put up or shut up - has been extended to 8 August.
As at 1015 BST, shares in Crest Nicholson were trading 3% higher at 245.4p, while Bellway was 2% lower at 2,536p.
Earlier this month Crest Nicholson rejected another offer from Avant Homes, which is controlled by New York hedge fund Elliott and led by former Persimmon chief Jeff Fairburn.
UK housebuilders have been facing tough conditions in recent years, including limited supply, surging inflation, the cost of living crisis and higher borrowing costs.
But shares in the sector jumped last week on hopes that the new Labour government will reinvigorate the sector, including overhauling the planning system.
Direct Line is to put its flagship motor brand on price comparison websites for the first time, the insurer said on Wednesday, as part of a wider strategy intended to boost profits and cut costs.
Unveiling the "refreshed" strategy at its capital markets day, DLG acknowledged that around 90% of customers preferred to shop on price comparison sites.
"In motor, we aim to deliver technical excellent across the value chain and meet customers where they shop," it said.
"We aim to deliver sustained, profitable growth in motor by focusing on all elements of the insurance value chain, pricing and underwriting, customer experience, claims and distribution."
Outside of motor, DLG said it would focus on home, commercial direct and rescue, and exit or stop investing in OEM affinity motor partnerships, pet, travel and other personal lines businesses.
It will also seek £100m in gross run-rate cost savings by 2025, and plans to pay round 60% of operating profits as a regular dividend.
New chief executive Adam Winslow said he had "rigorously reviewed" the business since joining just over four months ago.
He continued: "Putting our strongest brand, Direct Line, on price comparison websites...means we will be shaking up the motor insurance market once again.
"However, DLG is about more than just motor, and we have ambitious plans to grow in home, rescue and commercial direct.
"Our refreshed strategy will be delivered by our new executive team, who have significant expertise in our core markets."
Founded in 1985, DLG revolutionised the insurance market by bypassing brokers and selling direct to customers.
In recent years it put some brands on price comparison sites, including Churchill and Privilege, but up until now had refused to feature its biggest brand.
Market Movers
FTSE 250 - Risers
SSP Group (SSPG) 171.50p 9.65%
Travis Perkins (TPK) 850.00p 6.12%
Ocado Group (OCDO) 363.80p 4.27%
Helios Towers (HTWS) 127.00p 4.10%
W.A.G Payment Solutions (WPS) 65.60p 3.80%
Indivior (INDV) 782.50p 3.44%
Man Group (EMG) 256.20p 3.39%
Abrdn (ABDN) 164.20p 3.27%
RS Group (RS1) 723.50p 3.21%
Direct Line Insurance Group (DLG) 199.00p 3.16%
FTSE 250 - Fallers
Wetherspoon (J.D.) (JDW) 748.50p -2.60%
SThree (STEM) 426.50p -2.40%
Ascential (ASCL) 352.00p -1.84%
Redrow (RDW) 684.00p -1.65%
JTC (JTC) 995.00p -1.09%
Bytes Technology Group (BYIT) 525.50p -1.04%
Bellway (BWY) 2,554.00p -1.01%
NB Private Equity Partners Ltd. (NBPE) 1,610.00p -0.62%
ITV (ITV) 82.50p -0.60%
Moonpig Group (MOON) 199.80p -0.60%
Email this article to a friend
or share it with one of these popular networks:
You are here: news
10 Lower Thames St,
London EC3R 6EN