SSP Group plc (“SSP” or “the Group”), a leading operator of food and beverage outlets in travel locations worldwide, issues a Pre Close Trading Update for the fourth quarter of its financial year ending 30 September 2019, covering the period from 1 July to 30 September 2019.
SSP had a good fourth quarter and made further progress on its strategic initiatives. Total Group revenue is expected to increase by approximately 7.8% on a constant currency basis, comprising like-for-like sales growth of approximately 1.8% and net contract gains of approximately 6.0%. At actual exchange rates, total Group revenues for the period are expected to increase by approximately 10% year-on-year.
Overall, the trends seen in like-for-like sales growth in the third quarter have continued into the fourth quarter. In the UK, the air sector has been fairly resilient over the fourth quarter, while rail has remained softer, albeit benefitting from a lower level of disruption in the rail network. In Continental Europe, like-for-like sales continued to be held back by slower passenger growth and the impact of airport redevelopment in the Nordic countries and in Spain. In North America, like-for-like sales growth has been affected throughout the quarter by the grounding of Boeing Max 737 aircraft and the transfer of passengers away from our terminals at some airports. In the Rest of the World, like for like sales growth has been mixed with good performances in Egypt and the Middle East continuing to be offset, as anticipated, by the cessation of operations at Jet Airways in India, weaker Chinese passenger numbers and more recently the protests in Hong Kong. For the full year we expect like-for-like sales growth for the Group to be just below 2.0%.
After another strong quarter, net contract gains for the full year are expected to be just above our previous expectations, at around 5.5%, and as usual they will be accompanied by pre-opening costs. Net contract gains have been driven by significant growth in North America and Continental Europe and we have recently commenced operations in Brazil, a new territory for SSP.
Despite the many external challenges, particularly towards the end of the year, SSP has performed well and guidance for FY19 remains unchanged. Looking into 2020, many of these challenges will remain as well as ongoing economic uncertainty and the expectation of airline capacity cuts. That said, the diversity of the business and flexibility of the model leave us well placed to benefit from the significant structural growth opportunities in our markets and to create further value for shareholders.
Trading results from outside the UK are converted into Sterling at the average exchange rates for the period. Our estimate of the overall impact on revenue of the movement of foreign currencies (principally the Euro, US Dollar, Swedish Krona, and Norwegian Krone) during the full year 2019 compared to the 2018 average is expected to be around 1%.
2019 Full Year Results Announcement
The Group’s results for the year ending 30 September 2019 are expected to be released on 20 November 2019.