INTERNATIONAL. Global travel restaurateur SSP Group has made a strong start in the first four months of its 2023 financial year (1 October 2022 to 31 January 2023) with £871 million in sales, exceeding the comparable pre-COVID-19 pandemic level by +3%.
The SSP markets of North America, Continental Europe and the Rest of the World have all tracked above 2019 levels across the period.
In a trading statement, the company noted that the impressive revenue performance includes the benefit from net contract gains as it accelerates the mobilisation of its significant pipeline, in addition to price increases compared to the same period in 2019.
“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” – SSP Group CEO Patrick Coveney
The company has continued its progress in extending and renewing contracts as well as winning new business, including in North America as well as in India, Malaysia and Thailand, to augment the strong pipeline.
Approximately two thirds of sales from net new business openings in the company’s secured pipeline are expected to come from the North America and Rest of the World regions.
The company noted that the performance has been driven by a further recovery in passenger numbers, led by strong leisure travel demand over the extended holiday season.
This momentum, it said, has 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, SSP also observed.
Regional performance
In North America, SSP said that 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 SSP continues to grow business in conjunction with 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 what the company described as an exceptional performance in India, where revenues from the joint venture with Travel Food Services more than doubled year-on-year.
Australia, Thailand and the Middle East also performed particularly well, the company noted.
SSP observed that following the reopening 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 company noted that 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, SSP added.
Sustainability
SSP published its first Sustainability Report in January this year, outlining its strategy, which focuses on three priority areas: serving customers responsibly, protecting the environment, and supporting colleagues and communities.
The company stated that it has 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.
SSP said it has already made significant progress, for example on eliminating unnecessary single use plastic from around 80% of its own brand packaging and reducing direct Scope 1 and 2 emissions by -36% from a 2019 baseline.
The company added that it has now mapped its Scope 3 value chain emissions and submitted a 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,” the company noted.
Outlook
SSP highlighted that it continues to face macroeconomic uncertainty, but believes that the travel food & beverage sector will remain structurally resilient to pressures on consumer spending and that its global footprint, with rising exposure to the North American and Asia Pacific regions, will deliver sustained growth.
The new financial year has started well, the company said, as it has maintained revenue momentum and 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 SSP’s other regions means its performance remains on track against the planning assumptions outlined for 2023 when delivering its Preliminary Results on 6 December last year – namely for revenues to be in the region of £2.9-3 billion with corresponding EBITDA (pre-IFRS 16) in the region of £250-£280 million.
These planning assumptions included a contribution from SSP’s pipeline of new outlets which, once fully mobilised, are expected to add approximately £550 million to revenues by 2025, compared to 2019.
Leader reaction
Giving his view on his company’s early performance in the current financial year, SSP Group CEO Patrick Coveney 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 the 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.”
He concluded: 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.”
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.
