SSP (“SSP” or “the Group”), a leading operator of food and beverage outlets in travel locations worldwide, issues its Trading Update for the first quarter of its financial year ending 30 September 2020, covering the period from 1 October to 31 December 2019.
Group
SSP has had a good start to the new financial year with further encouraging progress on its strategic initiatives and unchanged profit expectations for the full year. Total group revenue in the first quarter increased by 7.5% on a constant currency basis, comprising like-for-like sales growth of 1.2% and net contract gains of 6.3%. Total group revenue growth at actual exchange rates was 6.1%.
Overall like-for-like sales growth was in line with our expectations, with the external headwinds noted in the second half of last year continuing, as anticipated, into the first quarter of this year. Like-for-like sales growth in the UK and North America remained robust, driven by increasing passenger numbers. Like-for-like sales in Continental Europe have been affected by the transport strikes across France during December. Like-for-like sales growth in the Rest of the World included, as expected, a full quarter’s impact of the disruption in Hong Kong, but benefitted from an improving trend in India. Looking forward to the full year, our expectation for like-for-like sales growth for the Group remains unchanged, at just below 2%.
Net contract gains remained strong in the first quarter, at 6.3%, driven by the significant new contract openings last year, including: in Continental Europe, at Montparnasse Railway station, the new motorway service stations in Germany and the Starbucks units in railway stations across the Netherlands; in North America, at Seattle, Oakland and LaGuardia Airports; and in the Rest of the World, at Cebu Airport in the Philippines and Bangalore Airport in India. The pipeline of new contracts remains encouraging.
Following the recent announcement of the acquisition of Red Rock’s operations in Perth and Melbourne Airports in Australia, we are today announcing the proposed acquisition of Station Food GmbH in Germany. Once fully operational in 2021, Station Food will add 28 new food and beverage units at railway stations in Germany and is expected to contribute approximately £10m to SSP’s revenue in 2020. Including this acquisition, our expectations for net gains for the full year have increased to around 5%.
Outlook
Looking forward to the full year, we remain confident of delivering another year of strong growth, in line with our expectations. Whilst a degree of uncertainty always exists around passenger numbers in the short term, we continue to benefit from the structural growth opportunities in our markets and to create further shareholder value.
Currency
Trading results from outside the UK are converted into Sterling at the average exchange rates for the period. The overall impact on revenue of the movement of foreign currencies (principally the Euro, US Dollar, Swedish Krona, and Norwegian Krone) during the first quarter of 2020 compared to the 2019 average was -1.4%. If the current spot rates were to continue for the rest of 2020, our expectation of the full year translation impact on revenue remains unchanged at approximately -2%.
Annual General Meeting
The Group’s Annual General Meeting will be held at 11:00am on 26 February 2020, at the offices of Travers Smith LLP, at 10 Snow Hill, London EC1A 2AL.
