UK. SSP today posted a +21.7% year-on-year rise in third-quarter revenues for the period ending 30 June.
In a trading update, the food & beverage operator said revenues had been boosted by the sharp weakening of the Pound Sterling against most currencies subsequent to Brexit (23 June 2016).
On a constant currency basis, total revenues for the period from 1 April to 30 June 2017 increased by +14.6%, with like-for-like sales growth of +3.6%, net contract gains of +7.6% and an additional +3.4% of revenue from India’s Travel Food Services (TFS), in which SSP took a 49% stake last year. TFS generated strong sales, “a little ahead of our expectations”, SSP said.
Like-for-like sales growth in the air sector was driven by increased passenger numbers. Trading in the rail sector has remained softer, SSP said.
Net contract gains benefited from the commencement of operations at Chicago Midway Airport, ahead of plan. SSP is running all Midway’s F&B operations on a temporary basis until re-development commences. The company also benefited from the deferral of some planned unit closures in the quarter.
“Looking forward, we expect net contract gains for the full year to be around 5.0% – 5.5%,” SSP said
For the nine months from 1 October 2016 to 30 June 2017, total group revenues increased by +10.4% on a constant currency basis. This included like-for-like sales growth of +3.2%, net contract gains of +4.8%, revenues from TFS of +2.8% and a negative impact of -0.4% arising from the additional leap year day in 2016.
Weak Pound, strong translation for offshore earnings
At actual exchange rates, total group revenues increased +20.4% year-on-year, underlining the profound impact that Brexit is having on UK companies earning much of their revenues overseas.
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 2017 compared to the 2016 average was +10.0%. If the current spot rates were to continue for the rest of 2017, SSP expects a positive effect for the full year of around +7.0%.
SSP concluded: “Looking forward, whilst 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.”
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