Travel concession group SSP (SSPG) has reported a more than 40% hike in first-half profits as air passenger numbers swelled, but trading in railway stations in the UK and Europe slowed in the wake of the terrorist attacks in Paris and Brussels.
Sales at the food retailer, which operates outlets at airports, train stations and motorway service sites under brands such as Burger King, Upper Crust, Starbucks and Ritazza, increased 5.9% on a constant currency basis (4.4% at actual FX rates) to £897m in the six months to 31 March.
The rise was made up of 3.3% of like-for-like growth, 2% from net contract gains and a further 0.6% from the additional leap year day.
SSP said growth was driven by an increase in air passenger travel, as well as retailing initiatives, operational improvements and its broad portfolio of brands.
Operating profits soared 22.6% to £30.9m as margins improved by 50 basis points to 3.4% and pre-tax profits were £23.2m, up from £16.4 a year ago.
First quarter like-for-like sales growth of 4.3% slowed to 2.4% in the second quarter as trading in UK and European railway stations was affected by the Paris and Brussels terror attacks offsetting the strong figures in the air sector across the globe.
“Like-for-like sales grew strongly in the UK and Continental Europe in the early part of the new financial year,” the group said. “This strong growth moderated following the geopolitical incidents in Paris and Brussels and we have seen a slightly weaker trading environment throughout the second quarter.”
UK revenues increased by 2.7% to £351.2m, but there were lower passenger numbers and dwell times in London train stations, particularly following the Paris attacks in mid-November, SSP added.
Operating profits plunged 14.4% to £11.9m in Continental Europe as a result of sharp declines in like-for-like sales after the incidents in Paris and Brussels.
The second half of the financial year had started in line with forecasts, with like-for-like sales expected to reflect the levels seen in the second quarter and the tough comparatives from the second half of last year, SSP said.
The group won a number of significant new contracts in the first half, including a seven-year £90m contract to serve Düsseldorf Airport, and added there was an “encouraging” pipeline of new contracts going forward.
CEO Kate Swann said: “SSP has made further good progress in the first half of 2016 and we continue to deliver our strategic initiatives. Constant currency operating profit was up 28% driven by good like-for-like sales growth in our existing business, new contract openings, which are building our presence across the world, and further operational improvements. I am particularly encouraged by the pace of development in our North America and Asia Pacific operations.
“Looking forward, the second half has started in line with our expectations. Whilst a degree of uncertainty always exists around passenger numbers in the short term, we are well placed to benefit from the structural growth opportunities in our markets and to create further shareholder value.”
SSP’s share price has risen strongly so far today on back of the growth and steady outlook, with the stock up 2.85 to 308.4p.
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