UK/INTERNATIONAL. Leading travel food & beverage company SSP Group has issued an encouraging trading update for the quarter ended 30 June, with revenue running at 87% of 2019 levels. This is the company’s third financial quarter. For the nine-month period from 1 October 2021 to 30 June 2022, total group revenues averaged 72% of 2019 levels.
At its interim results on 24 May, SSP reported that revenue had averaged 83% of 2019 levels for the first six weeks of Q3. Since then, revenue continued to strengthen, running at 89% of 2019 levels in the following seven weeks, or 87% of pre-pandemic figures for Q3 as a whole. This includes a benefit from net gains and pricing compared to the same period in 2019.
Recovery in passenger traffic and longer dwell times in some markets were the key factors underpinning the revenue performance. The recovery has been led by domestic and leisure travel in both airports and railways. Rail commuter travel continues to recover well, noted SSP, but at a slower pace than leisure travel.
Continental Europe saw sales in the third quarter average 93% of 2019 levels, and North America, averaging 91%. In the UK, sales averaged 82% for the quarter, driven by a strengthening of sales in airports, with trading in rail outlets affected by recent industrial action.
Encouragingly, said SSP, there has been a good recovery in the Rest of the World business, where sales averaged 75% of 2019, with strong performances in India, Australia and Thailand. In China and Hong Kong, passenger travel remains at low levels, reflecting the continuing travel restrictions.
Encouraging outlook
SSP highlighted the “considerable uncertainty in the macroeconomic and geopolitical backdrop”, but said it is well positioned to benefit from the continued recovery of the travel sector. Current challenges include airport disruption, labour shortages and industrial action across certain air and rail markets.
“In common with the entire hospitality sector, we continue to face widespread and increasing inflationary pressures impacting our supply chain, labour and energy costs, and these are anticipated to persist well into next year. However, we are confident in our ability to manage these pressures through productivity and pricing initiatives and expect to mitigate the impact on profit, while sustaining the positive momentum in consumer demand.”
The medium-term expectation for a recovery of the like-for-like business to 2019 levels of profitability remains unchanged. As reported, by 2025 the pipeline of new contracts is expected to add around £500 million to revenues compared to 2019.
For the current year, SSP now expects to deliver sales of around £2.1 billion and EBITDA margin (on a pre-IFRS 16 basis) of 6%, towards the upper end of its previous full-year guidance range.
