SSP Group plc (“SSP” or “the Group”), a leading operator of food and beverage outlets in travel locations worldwide, issues its Trading Update for the third quarter of its financial year ending 30 September 2018, covering the period from 1 April to 30 June 2018.
SSP has had a good third quarter and has made further encouraging progress. Total group revenue increased by 7.3% on a constant currency basis, comprising like-for-like sales growth of 2.7%, net contract gains of 3.3% and the impact of the Stockheim acquisition of 1.3%. At actual exchange rates, given the relative strengthening of sterling against most currencies compared with the same period last year, total Group revenues for the period increased 5.8% year-on-year.
Like-for-like sales growth in the UK and Continental Europe was broadly in line with that seen in the first half of the year, driven by on-going growth in the air sector. As anticipated, trading in the rail sector continues to be softer, with some additional impact from strike action in France. In North America, like-for-like sales growth was good, again driven by increasing air passenger numbers. In the Rest of the World, the trends seen in the first half have continued into the third quarter with good like-for-like sales growth, including in Hong Kong, Egypt and India. Looking forward to the rest of the year, our expectations remain unchanged and we anticipate like-for-like sales growth for the Group to remain in the region of 2% to 3%.
Net contract gains were driven by strong contributions from North America and the Rest of the World. Looking forward, trading in the new units has been encouraging and the programme of new unit openings for the rest of the year, in particular in North America, is slightly ahead of our plans. As such we are now expecting the contribution from net gains for the Group in the second half to be around 3%, and around 4.5% – 5% for the full year.
We have seen a good improvement in the operating margin in the third quarter driven by the on-going roll out of our strategic initiatives, with operating margin growth a little ahead of that seen in the first half (excluding the acquisition impact of TFS).
For the nine month period from 1 October 2017 to 30 June 2018, total Group revenues increased by 10.2%, including LFL sales growth of 2.8%, net contract gains of 5.6% and revenues from acquisitions of 1.8%. At actual exchange rates, total Group revenue increased by 8.3% year on year.
Looking forward, whilst a degree of uncertainty always exists around passenger numbers in the short term, we are well placed to continue to benefit from the structural growth opportunities in our markets and to create further shareholder value.
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 three quarters of 2018 compared to the 2017 average was -1.9%. If the current spot rates were to continue for the rest of 2017, we would expect a negative effect for the full year of around 2.0%, in line with our previous expectations.
2018 full year results announcement
The Group’s results for the year ending 30 September 2018 are expected to be released on 21 November 2018.