UK/INTERNATIONAL. A robust contract pipeline and an encouraging start to a new joint venture in India underpinned a +38.5% gain (+24.7% at constant currency) in first-half profits for food & beverage concessionaire SSP.
Operating profit reached £42.8 million (US$55.40 million) for the six months to 31 March. Revenue rose +8.1% (constant) and +19.6% (actual) to £1,073 million (US$1,389 million). Like‐for-like sales increased +2.9%, driven by increased air travel and a series of retail investments and initiatives.
Net gains of +3.4% were driven by strong performances in North America and the Rest of the World. The joint venture struck with Travel Food Services in India in late 2016 added +2.4% to revenue and £3.7 million (US$4.8 million) to operating profit, resulting in a combined group operating margin of 4.0%.
Underlying operating margin was up 30 basis points at constant currency to 3.7% as strategic initiatives delivered well, SSP noted.
SSP operates F&B concessions in travel locations, operating restaurants, bars, cafés, food courts, lounges and convenience stores in airports, train stations, motorway service stations and other leisure locations. It has businesses at approximately 140 airports and 280 rail stations, and operates more than 2,200 units in over 30 countries.
CEO Kate Swann said: “SSP has delivered another good performance in the first half of 2017 and we continue to make progress on our strategic initiatives. Constant currency operating profit was up +25% driven by good like-for-like sales growth and further operational improvements.
“We have had a particularly strong period of new contract openings, growing our presence across the world particularly in North America and the Asia Pacific region. The pipeline is robust and we are pleased with the new contracts won in the first half.
“Our joint venture in India has started well and we are encouraged by the progress we are making there.
“Looking forward, the second half has started in line with our expectations and whilst a degree of uncertainty always exists around passenger numbers in the short term, we continue to be well placed to benefit from the structural growth opportunities in our markets and our programme of operational improvements.”
Net contract gains were 3.4% in the first half, an encouraging increase from last year’s net gains of 2.0%, SSP noted. “We saw strong contributions from North America (+11.1%) and the Rest of the World (+19.4%, excluding TFS). New unit openings in airports in Tampa, Boston, Minneapolis and Montreal in North America, and at Beijing, Hong Kong, Singapore and Don Mueang in Thailand in the Rest of the World have contributed to this strong performance.
“We continue to focus on retaining profitable contracts and our contract renewal rate in the first half of 2017 was in line with our plans. We are encouraged by the pipeline of new contracts. In the first half we won a number of significant new airport contracts including, in the USA, at JFK T7, and in Thailand, Spain and Greece, and we have recently been awarded a contract at Chicago Midway International Airport. We expect to begin operating these contracts progressively over the next two years.”
NOTE: The Moodie Davitt Report also publishes The Foodie Report, the world’s only media focused on airport (and other travel-related) food & beverage. The Foodie Report e-Newsletter is published every two weeks and The Foodie Report e-Zine every month.
Please send all news of food & beverage outlet openings, together with images, menus, video etc to Martin@MoodieDavittReport.com to ensure unrivalled global exposure.
The company also organises the annual Airport Food & Beverage (FAB) Conference & Awards.
FAB 2017, hosted by Greater Toronto Airports Authority, will take place in Toronto on 21-23 June. For details, click here.
