After a strong performance by its North American operations, the catering group behind Upper Crust & Caffe Ritazza has raised its guidance for full-year results to the upper end of their expectations.
SSP Group, a travel outlet food operator that is one of the largest in the world, reported that the revenues for the region are now 124% higher than they were before the Covid merger. This reflects the increase of domestic air travel as well as the size of net contract gains.
The company stated that it expected to achieve earnings at the higher end of the previous guidance range of £250 million to £280 million, following the strong growth of the first half of the year, especially in the United States.
It also said that it had maintained revenue momentum throughout the group and was now projecting revenues for the full year to be in the upper end of its previous range, which was £2.9 billion up to £3 billion.
SSP’s board of directors announced that it expects to resume dividends in the coming year, beginning with the final dividend for this full-year.
Early trading saw shares of SSP jump from 210p to 276 1/2p. This is a jump of 12 1/4p or 4.7 percent.
said that the company had “an enhanced level of confidence” in its planning assumptions for the year 2024 as a result the strong trading trend. Analysts believe that SSP’s 2024 revenue guidance could be revised upwards from £3.2 billion in revenues to £3.4 billion with earnings of £325 to £375 millions.
The group has boosted its North American ambitions with a new deal, which will allow it to have a presence in over 30 of the US’s 80 largest airports. The deal will add 40 new food and beverage outlets to seven airports. This includes for the first at Detroit Metropolitan Wayne County Airport, Denver International Airport, Philadelphia International Airport and Cleveland Hopkins International.
SSP stated that the acquisition will generate additional revenues of approximately $100 million, from a portfolio consisting of local concepts and boutique brands as well as popular brands.
Patrick Coveney who became chief executive officer of SSP one year ago said that after the pandemic, he would make North America a central part of his growth strategy. SSP holds a 10% share of the $6 billion US market. However, Coveney stated that he expects America to surpass Britain in 18 months as SSP targets organic growth and acquisitions.
The group was spun off from Compass Group in 2006. It has around 2,700 outlets spread across 600 locations in 36 different countries. About 550 brands are used, including Camden Food Co., its own concepts and franchises like Burger King or Starbucks. It employs 37,000 people.
Coveney is targeting a spot in the FTSE 100 within the next five-years. He said that the group “continued to deliver on our strategic priorities”, by focusing its attention on the high-growth markets in North America and Asia Pacific, and stepping up its efficiency program to boost profits conversion.
Since the previous full-year results in 2016, the company has secured £75 million worth of new contracts, increasing the value of the annual new sales to £625 millions by 2026. It also entered the Italian market with a contract at Rome’s main train station.
SSP’s revenues increased by 64.1% to £1.32 Billion in the six months ending March 31 compared to last year. This is equivalent to 104% of 2019 levels. Passenger travel volumes have continued to improve. North American revenues in the first half of 2019 were 127% higher than last year’s levels.
The underlying earnings increased from £14.7 to £90.5 and the pre-tax profit swung to £15.8 from £2.3.
Cost control and inflationary pressures were managed to lift its first-half earnings from 1.8 percent last year up to 6.9 percent this year.
Sales in the first six-weeks of the second half continued to grow, reaching 111 percent of levels from 2019. This was partly due to the strong Easter holiday, with Europe up to 116 percent and the rest of the world at 112 percent.