SSP Group revenues strengthen in Q3

Food and beverage outlets operator SSP Group said on Thursday that revenue has continued to strengthen since the publication of its interim results in May.

SSP said revenues had run at 89% of 2019 levels over the last seven weeks, leaving revenues at 87% of 2019 levels for the third quarter as a whole - including a benefit from net gains and pricing compared to the same period in 2019. For the nine months ended 30 June, total group revenues averaged 72% of 2019 levels.

The FTSE 250-listed group stated its revenue performance had been driven by "an ongoing recovery" in passenger numbers and had also benefitted from longer passenger dwell times in certain markets.

Geographically, SSP witnessed "a strong recovery" across all divisions, led by Continental Europe, where sales in the third quarter averaged 93% of 2019 levels, and North America, averaging 91%. In the UK, sales averaged 82% for the quarter, driven by a further strengthening of sales in air, while trading in rail was impacted by recent industrial action.

SSP said while "considerable uncertainty" remains in the macroeconomic and geopolitical backdrop, it was "well positioned" to benefit from the continued recovery of the travel sector, notwithstanding the current challenges of airport disruption, labour shortages, and industrial action across certain air and rail markets.

"Our medium-term expectation for a recovery of the like-for-like business to 2019 levels of profitability remains unchanged. As previously reported, by 2025 our pipeline of new contracts is expected to add approximately £500.0m to revenues compared to 2019. As the business continues to recover, we expect the mobilisation of this pipeline to accelerate. The anticipated underlying earnings contribution from new unit openings will, as normal, include the impact of pre-opening costs," said SSP.

"For the current year, based on our performance to date and the current strength of the travel recovery, we now expect to deliver sales in the region of £2.1bn and EBITDA margin (on a pre-IFRS 16 basis) in the region of 6%, which is at the upper end of our previous full-year guidance range."

As of 0815 BST, SSP shares were down 2.62% at 230.80p.

Reporting by Iain Gilbert at Sharecast.com