SSP profit up 40% in first half as air passenger numbers grow

Food and beverage outlets operator SSP posted a jump in first-half profit and revenue on Wednesday as it reaped the benefits of growing air passenger numbers, new contract openings across the world and its ongoing programme of operational improvements.

In the six months to the end of March, underlying pre-tax profit rose 40.3% to £48.7m on revenue of £1.18bn, up 9.8%. Like-for-like sales grew 2.8%, which was a slight slowdown from 2.9% in the same period a year ago. SSP said LFL sales in the air sector grew more strongly than in rail, driven by the continued growth in air passenger numbers, with trading in the rail sector remaining softer.

Underlying operating profit was up 32.6% to £55.2m, while underlying earnings per share were up 33.3% to 5.6p and the dividend per share was bumped up 50% to 4.8p.

The company won a number of "significant" new airport contracts in the first half, including North America, at Phoenix, Seattle and San Francisco, and in the Rest of the World, at Sheremetyevo airport in Moscow and across India.

Chief executive officer Kate Swann said: "SSP has delivered another strong performance in the first half of 2018. Operating profit was up 32.6% at constant currency, driven by good like-for-like sales growth, significant new contract openings and further operational improvements. We have continued to grow our presence across the world, particularly in North America and Asia and our new business in India is performing well.

"Looking forward, the second half has started in line with our expectations 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."

Shore Capital said underlying pre-tax profit was some £3.2m better than its estimate.

"Looking forward, we are increasing our FY 2018F profit before tax by £6m to circa £173m (EPS up circa 0.8p to 23.5p) to reflect the stronger H1 performance and further stronger margin and new contract momentum in the second half (we now expect 50bps margin improvement for the full year versus 30bps previously).

"We have a buy stance on SSP highlighting the multi-decade structural growth story and further scope for robust margin growth and cash returns to shareholders," said analyst Greg Johnson.

At 0940 BST, the shares were up 1.7% to 638.10p.