SSP Group lifts expectations after decent first half

Travel food and beverage retail specialist SSP Group reported underlying operating profit of £62.5m in its interim results on Wednesday, which was up 14.6% at constant currency and 13.2% at actual exchange rates.

The FTSE 250 company said revenue in the six months ended 31 March totalled £1.26bn, which was 6.8% higher year-on-year at constant currency, and 7.1% at actual exchange rates.

Like-for-like sales were ahead 2.0%, which the board said was driven by air passenger travel and retail initiatives, with net gains reported at 4.1%, which was put down to “strong” performances in continental Europe, North America and the rest of the world geographies.

SSP said its underlying operating margin for the six months was up 30 basis points year-on-year to 5.0% at constant currency, with its strategic initiatives said to be delivering well.

Underlying profit before tax was up 11.3% at £54.2m, with reported profit before tax said to be £51.4m for the period.

The company’s underlying earnings per share totalled 6.7p, which were 19.6% higher, while reported earnings per share were 6.1p.

Capital investment during the period reached £108.2m, which the directors said reflected the “significant” new contract opening programme, which had been first-half weighted in 2019.

It said it had an “encouraging” pipeline of new contracts with wins in North America, Brazil, India, Spain and France.

The board declared an interim dividend of 5.8p per share, up 20.8% on last year, which followed the completion of the £150m special dividend and share consolidation in April.

“SSP has delivered another good performance in the first half of 2019, driven by strong sales growth, significant new contract openings across the world and our programme of operational improvements,” said SSP Group chief executive officer Kate Swann.

“We have continued to grow our global presence, particularly in North America and Asia, and we have further expanded our operations in Latin America.”

Swann said those were high growth markets for SSP, presenting the company with “exciting opportunities”.

Given that positive momentum, she confirmed the company was raising its expectations for net gains in the second half of the year.

“Looking forward, the second half has started well and whilst a degree of uncertainty always exists around passenger numbers in the short term, we continue to be well placed to benefit from the structural growth opportunities in our markets and our programme of operational improvements.”