REG - SSP Group PLC - Trading Update

SSPAnnouncement

16/02/2023 07:00

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RNS Number : 0709Q  SSP Group PLC  16 February 2023

 

 

 

                    16 February
2023
 
 
      LEI:213800QGNIWTXFMENJ24

Trading Update

"The sustained recovery in global passenger demand and the mobilisation of our
significant new

 contract pipeline leaves SSP well-positioned to deliver strong growth over
the medium term"

SSP Group plc ("SSP" or "the Group"), a leading operator of food and beverage
outlets in travel locations worldwide, issues a Trading Update for the first
four months of its 2023 financial year, covering the period from 1 October
2022 to 31 January 2023.

The new financial year has started well with Group sales of £871m
representing a strengthening of performance to 103% of 2019 levels and with
revenues tracking above 2019 levels in North America, Continental Europe and
the Rest of the World. This revenue performance includes the benefit from net
contract gains as we accelerate the mobilisation of our significant pipeline,
in addition to price increases compared to the same period in 2019.

The encouraging revenue performance has been driven by a further recovery in
passenger numbers, led by strong leisure travel demand over the extended
holiday season. This momentum continued through the autumn and into the
winter, demonstrating a resilience to the broader pressures on consumer
spending. Business and commuter travel also continued to recover, albeit at a
slower pace.

We have continued to make progress extending and renewing contracts as well as
winning new business, including in North America as well as in India, Malaysia
and Thailand, to augment our strong pipeline.  Approximately two thirds of
sales from net new business openings in our secured pipeline are expected to
come from the North America and Rest of World regions.

Regional Performance

In North America, the strong revenue growth reflected the ongoing recovery in
domestic air travel, despite the impact of flight cancellations and
weather-related disruption in December and January. The performance included a
significant contribution from net contract gains, as we continue to grow our
business in conjunction with our joint venture partners. In Continental
Europe, most markets performed well, boosted by an extended holiday season
which stretched into the autumn, across both the Air and Rail sectors. In the
Rest of the World, revenues continued to recover well, including an
exceptional performance in India, where revenues in our joint venture (TFS)
more than doubled year-on-year. Australia, Thailand and the Middle East also
performed particularly well. Since the re-opening of the Chinese borders in
early January, passenger numbers in China and Hong Kong have now started to
recover, albeit from very low levels. In the UK, the overall sales performance
reflected both the seasonally higher weighting of rail within the business and
the impact of an increased frequency of industrial action across the rail
network during December and January. However, the UK Air business maintained
its strong momentum.

 

Revenue performance by region for the four months to 31 January 2023:

 Region             £m       vs. 2019      vs. 2022
 North America      196      125%          175%
 C. Europe          330      108%          156%
 UK & ROI           215      83%           146%
 Rest of World      130      101%          250%
 Group              871      103%          167%

 

Sustainability

 

We published our first Sustainability Report in January of this year,
outlining our strategy, which focuses on three priority areas: serving our
customers responsibly, protecting our environment, and supporting our
colleagues and communities. We have set clear and measurable targets to 2025,
as well as a wider ambition to achieve net zero carbon emissions (Scopes 1, 2
and 3) by 2040. We have already made significant progress, for example on
eliminating unnecessary single use plastic from around 80% of our own brand
packaging and reducing our direct Scope 1 and 2 emissions by 36% from our 2019
baseline. We have now mapped our Scope 3 value chain emissions and submitted
our roadmap to achieve net zero emissions by 2040 to the Science-Based Targets
Initiative. We are seeking to take an industry-leading position in this area
and are developing a "climate-smart" food agenda to reduce the emissions
associated with the food and beverages we serve, which represent 78% of our
total carbon footprint.

 

Outlook

 

Whilst we continue to face macroeconomic uncertainty, we believe that the
travel food and beverage sector will remain structurally resilient to
pressures on consumer spending and that our global footprint, with rising
exposure to the North American and Asia Pacific regions, will deliver
sustained growth. The new financial year has started well as we have
maintained revenue momentum and have actively mitigated inflationary pressures
to deliver a strong conversion of sales to profitability.

Despite the impact of industrial action in the UK rail network, strong trading
across our other regions means our performance remains on track against the
planning assumptions outlined for 2023 at our Preliminary Results on 6
December 2022, namely for revenues to be in the region of £2.9-3.0bn with
corresponding EBITDA (pre IFRS 16) in the region of £250-£280m. As
previously reported, these planning assumptions included a contribution from
our pipeline of new outlets which, once fully mobilised, will add
approximately £550m to revenues by 2025, compared to 2019.

Commenting on the performance, Patrick Coveney, CEO of SSP Group, said:

 

"The strong momentum in performance that we saw across the business in the
second half of last year has continued into the new financial year,
demonstrating the high quality of our business model. We are making excellent
progress against our strategic ambitions and are on track to deliver against
the planning assumptions we set at the beginning of the financial year.

 

We have headroom for further growth and returns in multiple markets across the
world. In particular, we see significant momentum and potential to accelerate
expansion across the North America and Rest of World markets where revenues
are now growing rapidly and which together are expected to account for
approximately 40% of the Group by 2025. In addition to this we continue to
expand in a targeted way in the UK, Europe and the Middle East.

 

The long-term structural growth in the air and rail travel sectors and the
ongoing demand from clients and customers around the world for our brands and
food concepts leave us well-placed to create significant value for
shareholders for many years ahead.  I would like to thank our colleagues,
clients and brand partners across the world for the enormous contribution that
they make to SSP each and every day."

 

A conference call with Patrick Coveney, CEO, Jonathan Davies, Deputy CEO and
Group CFO and Sarah John Director of Corporate Affairs, will be held at 8.30am
(UKT) today, and details of how to join can be accessed at
https://webcasts.foodtravelexperts.com/results/tradingupdate2023/vip_connect
(https://webcasts.foodtravelexperts.com/results/tradingupdate2023/vip_connect)
.

 

Annual General Meeting

 

The Group's Annual General Meeting will be held today at 11:00am at the
offices of Travers Smith LLP, at 10 Snow Hill, London, EC1A 2AL.

 

Investor and analyst event: SSP America

 

We will host an event for investors and analysts to showcase our North
American business on Wednesday 21 June 2023 in New York.  Access to the event
will be by invitation only, with more details to follow in due course.
Investors and analysts are able to register their interest by e-mailing
InvestorEvent@ssp-intl.com (mailto:InvestorEvent@ssp-intl.com) .

 

Investor and analyst briefing: ESG

 

We will host a briefing for investors and analysts on our Sustainability
Strategy on Tuesday 18 April 2023, at our offices in London.  Access to the
briefing will be by invitation only, with more details to follow in due
course. Investors and analysts are able to register their interest by
e-mailing InvestorEvent@ssp-intl.com (mailto:InvestorEvent@ssp-intl.com) .

 

CONTACTS

Investor and analyst enquiries

Sarah John, Corporate Affairs Director, SSP Group plc

Sarah Roff, Group Head of Investor Relations, SSP Group plc

On 16 February 2023: +44 (0) 7736 089218

Thereafter: +44 (0) 203 714 5251

E-mail: sarah.john@ssp-intl.com / sarah.roff@ssp-intl.com

 

Media enquiries

Rob Greening / Nick Hayns

Powerscourt

+44 (0) 207 250 1446

E-mail: ssp@powerscourt-group.com

 

NOTES TO EDITORS

About SSP

SSP is a leading operator of food and beverage concessions in travel
locations, operating restaurants, bars, cafés, food courts, lounges and
convenience stores in airports, train stations, motorway service stations and
other leisure locations. We are present in 35 countries around the world and
have a portfolio of more than 550 international, national and local
brands.

 

www.foodtravelexperts.com (http://www.foodtravelexperts.com)

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