UK. Travel food & beverage specialist SSP Group today posted a trading update for its fourth quarter, noting that revenues for the period (July to September) are expected to climb +14.8% on a constant currency basis. The performance includes like-for-like sales growth of around +3%, net contract gains of +8.5% and additional revenue from Travel Food Services in India of +3.3%, compared with the same period last year.
At actual exchange rates, given the weakening of Sterling against most currencies compared with the same period in the prior year, total group revenues for the period are expected to increase by +17.5% year-on-year.
Like-for-like sales in the fourth quarter are expected to increase by about +3%. Like-for-like sales growth in the airport sector was driven by increased passenger numbers, with trading in the rail sector remaining “soft” during the quarter.
Net contract gains in the fourth quarter are expected to be +8.5%. SSP said in a statement: “This performance benefited from a strong contribution from our recently opened operations at Chicago Midway Airport, where we have continued to operate additional units, on a temporary basis, for the full quarter. The redevelopment of Chicago Midway Airport is expected to commence in FY 2018. Furthermore we have also benefited from the deferral of other planned unit closures which will now take place in FY 2018. TFS has continued to perform well, with results now expected to be ahead of our expectations.”
For the 12-month period from 1 October 2016 to 30 September 2017, total group revenues are expected to increase by approximately +11.4% on a constant currency basis, including like-for-like sales growth of +3.0%, net contract gains of +5.8%, revenues from TFS of +2.9% and a negative impact of -0.3% arising from the additional leap year day in 2016. At actual exchange rates, total group revenues are expected to increase by around +19.3% year-on-year.
The trends in the company’s operating margin in the first half of the year have broadly continued during the second half, noted SSP.
Looking forward, SSP said: “While a degree of uncertainty always exists around passenger numbers in the short term, particularly in the current environment, we are well placed to continue to benefit from the structural growth opportunities in our markets and to create further shareholder value.”
On the impact of currency on results, SSP noted: “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 2017 compared to the 2016 average has increased from the third quarter trading update and is now expected to be a positive effect of around +8%.”
The group’s results for the year ending 30 September 2017 are expected to be released on 22 November.