TIDMSSPG
RNS Number : 1314N
SSP Group PLC
21 September 2023
LEI:213800QGNIWTXFMENJ24
21 September 2023
Pre-Close Trading Update
"Encouraging underlying trading momentum and strong expected
full year performance"
S SP Group plc ("SSP" or "the Group"), a leading operator of
restaurants, bars, cafes and other food and beverage outlets in
travel locations across 36 countries, issues a Pre-Close Trading
Update in advance of the financial year-end on 30 September 2023.
Strong underlying trading momentum is expected to continue through
to the end of the financial year, leaving SSP well-positioned to
deliver results at the upper end of the ranges previously indicated
for both revenue and EBITDA (underlying pre-IFRS 16).
Revenue performance
Revenue for the last 16 weeks of the year (from 12 June to 30
September) is expected to be at c.116% of 2019 levels, on a
constant currency basis. This represents an underlying improvement
in trading since our statement on 21 June (covering the 10-week
period from 1 April to 11 June), where trading was at 112% of 2019
levels on a constant currency basis. Our revenue performance is
being driven by the continued recovery in passenger numbers,
particularly in the air sector, as well as our stronger customer
offer and digital proposition . In addition, revenues have
benefitted from price increases and further net contract gains.
North America, which now accounts for approximately a quarter of
Group revenue, continues to be a key driver of our performance.
Over the last 16 weeks of the financial year, revenues are expected
to strengthen to c.127% of 2019 levels, on a constant currency
basis, driven by robust domestic air passenger numbers and strong
like-for-like performance. Our performance includes a sales benefit
from the acquisition of the Midfield Concession business, with the
transfer of six of the seven airports completed. In Continental
Europe, revenues are expected to be at c.115% of 2019 levels, on a
constant currency basis, driven by strong summer air travel volume
and despite the impact of protests and travel disruption in France.
In the Rest of the World, revenues are expected to rise to c.132%
on a constant currency basis, as we saw further improvements in
passenger numbers across the Asia Pacific region, with particularly
strong performances in India and Egypt. In the UK and Ireland,
sales are expected to strengthen to c.100%, reflecting both the
improving performance and the higher mix of the air channel,
despite the rail sector continuing to be impacted by ongoing
industrial action.
For the second half as a whole, Group revenues are expected to
rise by 22% vs last year (at actual exchange rates), reflecting the
strength of our like-for-like performance in addition to further
net gains. In the full year, Group revenues are expected to be
c.GBP3.0bn vs GBP2.2bn in the prior year (at actual exchange
rates), representing growth of c.37% year-on-year.
Foreign exchange impact
Across the second half of the year, Sterling has strengthened
against most of our major currencies(1) compared to a weakening
over the same period in 2019 and 2022. The impact of this on our
reported revenue performance is set out below:
Revenue H2 vs 2019 H2 vs 2019 H2 vs 2022
YoY %
(constant FX (actual FX rates) (26 wks)
rates)
------------
Region first last First last (constant (actual
10 wks 16 wks 10 wks 16 wks FX rates) FX rates)
-------- ---------- -----------
N. America 120% 127% 123% 123% 137% 130%
-------- -------- ---------- --------- ----------- -----------
C. Europe 116% 115% 114% 107% 117% 116%
-------- -------- ---------- --------- ----------- -----------
UK & ROI 94% 100% 94% 100% 117% 117%
-------- -------- ---------- --------- ----------- -----------
Rest of
World 126% 132% 115% 114% 153% 141%
-------- -------- ---------- --------- ----------- -----------
Group 112% 116% 110% 110% 125% 122%
-------- -------- ---------- --------- ----------- -----------
(1.) Our major currencies include US Dollar, Euro, Norwegian
Krone, Swedish Krona, Indian Rupee and the Egyptian Pound.
New business activity
The strong organic growth momentum has been maintained
throughout the second half. The pipeline of secured net contract
gains is now expected to add over GBP700m to overall revenues
compared to 2019, on an annualised basis, representing at least an
additional GBP75m to the GBP625m reported at our Interim results in
May 2023. We expect these units to open over the next two years,
with the normal level of pre-opening costs and maturity
profile.
FY2023 expectations
Our expectations for FY2023 remain for revenue and EBITDA
(underlying pre-IFRS 16) to be at the upper end of the planning
assumptions provided at our Preliminary results in December 2022.
This would represent full year revenue of c.GBP3.0bn and EBITDA
(underlying pre-IFRS 16) of c.GBP280m with a corresponding EPS
(underlying pre-IFRS 16) towards the lower end of the previously
indicated range of 7.0-7.5p. We expect to deliver these results
despite the significant strengthening of Sterling against most of
our major currencies during the year.
This performance reflects a strong recovery in the EBITDA margin
compared to last year notwithstanding the ongoing inflationary
pressures on operating costs, which we continue to manage
successfully through productivity and pricing initiatives.
Medium-term outlook
While we continue to face into macroeconomic uncertainty and
sustained elevated levels of inflation, we believe that demand for
travel will remain resilient to pressures on consumer spending and
is well set for near and long-term structural growth.
Our strong expected performance in FY2023 underpins our
confidence in the delivery of our FY2024 planning assumptions (set
out in December 2022 at the prevailing FX rates), including for
EBITDA (underlying pre-IFRS 16) to be in the range of GBP325m -
GBP375m. We note that, reflecting the strengthening of Sterling
against most of our major currencies since December 2022, at
current FX rates the translation impact would be to reduce FY2024
EBITDA (underlying pre-IFRS 16) by approximately 6% or
c.GBP20m.
Reflecting the strong momentum in the pipeline and the timing of
openings, we are now planning for capital expenditure to be in the
region of GBP250m-GBP300m in the 2024 financial year.
Commenting on the performance, Patrick Coveney, CEO of SSP
Group, said:
"We are enjoying a good finish to the year, and there is real
momentum across the business as we enter FY2024. Our focus on
higher growth markets such as North America and Asia Pacific, as
well as our ongoing efforts to enhance our capabilities and
increase efficiencies, is delivering strong results. Looking ahead,
we continue to see significant opportunities for SSP to drive
growth and returns."
Sustainability update
In recent months, we have achieved two key sustainability
milestones. Firstly, this month, the Science-Based Targets
initiative (SBTi) verified our target to reach net-zero greenhouse
gas emissions across our value chain (Scopes 1, 2 and 3) by FY2040,
from a FY2019 base year. This includes our near- and long-term
targets which were found to meet the SBTi's criteria in terms of
timeframe, emissions coverage and ambition. Further details can be
found on our website and our targets are listed at
sciencebasedtargets.org/companies-taking-action .
Secondly, following our significant progress in sustainability
reporting and the continued delivery against our strategy, in June
2023, we achieved an MSCI ESG Rating of A, an improvement from our
previous rating. Further details can be found at www.msci.com .
Today's conference call
A conference call with Patrick Coveney, CEO, Jonathan Davies,
Deputy CEO and Group CFO and Sarah John, Director of Corporate
Affairs, will be held at 8.00am (UKT) today, and details of how to
join can be accessed at https://
webcasts.foodtravelexperts.com/results/preclosetradingupdate2023
2023 full year results announcement
The Group's results for the year ending 30 September 2023 are
expected to be released on 5 December 2023.
S
CONTACTS
Investor and analyst enquiries
Sarah John, Corporate Affairs Director, SSP Group plc
Sarah Roff, Group Head of Investor Relations, SSP Group plc
On 21 September 2023: +44 (0) 7736 089218 / +44 (0) 7980
636214
E-mail: sarah.john@ssp-intl.com / sarah.roff@ssp-intl.com
Media enquiries
Rob Greening / Nick Hayns
Powerscourt
+44 (0) 207 250 1446
E-mail: ssp@powerscourt-group.com
NOTES TO EDITORS
About SSP
SSP is a leading operator of food and beverage outlets in travel
locations worldwide, with c.37,000 colleagues in over 600 locations
across 36 countries. We operate sit-down and quick service
restaurants, cafes, lounges and food-led convenience stores,
principally in airports and train stations, with a portfolio of
more than 550 international, national and local brands. These
include our own brands (such as UrbanCrave, which brought the first
"street eats" concept to airports in the US and Nippon Ramen, a
noodle and dumpling concept in the Asia Pac region) as well as
franchise brands (such as M&S, Starbucks and Burger King).
Our purpose is to be the best part of the journey, and this is
underpinned by our aim to bring leading brands and innovative
concepts to our clients and customers around the world, with an
emphasis on great value, taste, quality and service - using digital
technology to boost efficiency.
www.foodtravelexperts.com
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END
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