INTERNATIONAL. Global travel restaurateur SSP Group has reported strong first-half financial results (to 31 March 2024), with revenues of £1.5 billion (US$1.91 billion), up +19% on a constant currency basis against the same period of last year. The company achieved double-digit growth across all regions.
The H1 revenues include like-for-like sales growth of +12%, net gains of +4% from the mobilisation of contract pipelines and a contribution of +3% from acquisitions in North America.
SSP also reported underlying EBITDA of £106 million (US$134.8 million), up from £91m (US$115.7 million) last year. The company noted strong contributions to profitability delivered by the North America and Asia Pacific & EEME regions, which it said reflects the faster growth in these markets and strong profit conversion.
Specifically, SSP also revealed “good” underlying EBITDA growth in the UK, where the travel restaurateur benefitted from a further recovery in passenger numbers, although there was ongoing impact from industrial action in the rail sector.
Profitability in Continental Europe was held back by a heightened level of renewals, particularly in the Nordics countries, the company said, and greater levels of industrial action that impacted the rail sector in France and Germany.
Some £144 million (US$183.1 million) was invested in capital projects in the first half, £59 million (US$75 million) was committed to acquisitions and there was working capital usage of £66 million (US$84 million), which SSP said reflects the normal seasonal profile as well as the unwind of the remaining payment deferrals from the COVID-19 period.
Since the half year-end, SSP said it has traded in line with expectations, with total revenue during the first six weeks of the second half (from 1 April to 12 May) up +14% year-on-year on a constant currency basis. Revenue in North America is up +28%, Continental Europe up +5%, UK up +9% and APAC & EEME up +25%.
Major sporting events set to provide SSP summer boost SSP said it is gearing up for a boost to demand over the summer across its Continental Europe business as millions of sports fans head to Germany for Euro 2024 and to Paris for the Olympic Games. For the Euros, of the ten cities across Germany in which matches are being played throughout June and July, SSP has a significant presence in eight of them. This includes venues at Berlin, Frankfurt, Düsseldorf, Stuttgart and Cologne airports, and eight major city train stations. SSP also has a presence in 12 of the 24 countries being represented at the tournament – meaning that it will be catering for millions of fans at both the beginning and the end of their journeys. An estimated 2.7 million fans will attend 51 matches across ten stadiums, with a further 12 million watching the games in designated fan zones.  SSP is also well placed to gain high levels of business from the Paris Olympics in July and August. The travel restaurateur operates nearly 160 outlets across the French capital’s airports (as a joint venture with ADP) and railway stations. Around 15 million visitors are expected to visit Paris during the Games, and a large proportion will pass through the city’s transport hubs. Passengers travelling from the UK by rail will also be able to enjoy a brand new SSP-operated outlet of The Breakfast Club at St Pancras, opening soon. SSP said it has a range of initiatives in place to prepare for both events and is gearing up for longer opening hours and recruiting extra staff to cater for the additional demand. SSP CEO Patrick Coveney commented: “We’re looking forward to welcoming visitors from all over the world, and as ever will be aiming to be the best part of their journey. Whether it’s a sit-down meal in one of our fine-dining concepts or a quick snack to eat on the go, we will be offering the best of French and German cuisine as well as international favourites to the many sports fans passing through our rail and air network.” |
Strategic highlights
SSP noted it has successfully pivoted to higher growth markets with 39% of its sales over the last 12 months now from North America and APAC & EEME (compared with 35% in the previous 12 months). The company is now present at 51 North American airports (37 in October 2022) and said it is on track to create a business there with annualised sales of over US$1 billion.
Significant new contracts won in H1 include seven units at Cincinnati Airport, three at Milan railway station and nine units at Noida International Airport in India. In the last six months SSP has won the rights to operate about 150 new units across all regions and mobilised about 200 units from its secured pipeline.
SSP said this current momentum in new business wins, together with the secured pipeline, underpins an expectation of the delivery of organic net gains (excluding acquisitions) of c.5% for FY24 and FY25 and c.3%-5% in the medium-term.
In total, about 80 new units have been acquired by SSP since the start of the year. This includes 62 units from the acquisition of Airport Retail Enterprises (ARE) in May 2024 (see our story here), which increases the size of the SSP Australia business from 40 to 102 units.
In North America, SSP completed the acquisitions of ECG in Canada and Mack II, gaining it entry to Hartsfield–Jackson Atlanta International, the busiest airport in North America. In addition, the company said it has completed on the transfer of Denver, the final airport of the ‘Midfield acquisition’.
SSP has also secured entry into two new high-growth markets: New Zealand and Indonesia. In Indonesia, the company has agreed to create a joint venture with PT Taurus Gemilang, subject to obtaining the necessary consents (we will bring you coverage of this, including comment from SSP CEO Patrick Coveney later today). The JV will initially operate 13 units, principally in Bali, and will give SSP a strong presence in this very large and growing market.
The combined consideration is c.£90m relating to the ARE and Indonesia transactions.
The company also commenced operations in Saudi Arabia during the first half following tender wins at Riyadh and Jeddah.
SSP also noted it has enhanced business capabilities with new brands and concepts, digital, sustainability and people driving an improved proposition; and a global customer rating (as measured through SSP’s customer listening tool, Reputation) from 4.2 to 4.4 out of a maximum score of 5.0.
FY2024 expectations
SSP said that while the business world faces macroeconomic and political uncertainty, it believes that demand for travel will remain resilient and the industry is well set for both short-term and long-term structural growth.
With the peak summer season approaching, SSP noted it is well-positioned to deliver its planning assumptions for FY24, as outlined in its Preliminary Results on 5 December 2023.
The company said it is planning for like-for-like sales growth for the full year of between +6% and +10% and for net contract gains in the region of +5% (excluding acquisitions). Including the acquisition of ARE in Australia, SSP noted it expects a contribution of c.3% from acquisitions in the year.
Medium-term outlook
Offering a medium-term outlook, SSP said its compounding shareholder growth and returns model, aligned to its medium-term financial framework, is set to deliver sales growth ahead of pre-COVID levels, including net gains of between +3% and +5% annually.
This predicted performance will result, it suggested, from a pivot to higher growth markets (principally the North America and APAC & EEME regions) which offer higher levels of structural demand and infrastructure growth, and where it has strong businesses with relatively low market shares and significant momentum.
SSP Group CEO Patrick Coveney said: “The first half has been a period of continued momentum, and we’ve made good strategic and financial progress. At constant currency, the Group delivered double-digit sales growth in all our geographies around the world – with an exceptionally strong like-for-like sales performance in APAC and EEME. Our momentum is being supported by tailwinds from the high structural growth of the markets in which we operate, our proven ability to win and retain high-returning contracts and by our value creating acquisitions.
“Supporting our top-line growth is disciplined cost management, and we are pleased to have delivered year-on-year EBITDA growth of +24% and to be announcing an interim dividend.
“Trading momentum has continued into the second half, and we are confident in delivering on our expectations for the full year. In particular, we are well set to capitalise on what we anticipate will be a summer of strong demand in all our markets – including Continental Europe, where the Olympics and the European Championships will help boost footfall in airports and stations. We will also start to realise the benefit of our latest value-creating acquisition in Australia and new market entries in New Zealand and Indonesia.
“As a business we are making good progress on our strategic priorities, thanks to the hard work and commitment of all our colleagues and the support of our clients and brand partners around the world. With our continued momentum and foundations in place for further expansion, we remain confident in our ability to deliver sustainable, compounding growth and returns for all our stakeholders in the years to come.”
We will bring you further reaction from Coveney later today. ✈
Note: The Moodie Davitt Report publishes the FAB Newsletter, which features highlights of openings, events and campaigns from around the world of airport and travel dining.
Please email Kristyn@MoodieDavittReport.com to subscribe.
