New contract wins and a resurgence in domestic air travel across North America, a key growth market, were key contributors to SSP Group's half-year sales growth, with its Asia Pacific segment also performing well
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SSP Group operates Peet’s Coffee at several US airports, including Oakland International | Photo credit: SSP Group
SSP Group has reported group sales reaching 104% of pre-pandemic levels, primarily driven by strong airport footfall in North America and recovering passenger numbers across Asia Pacific.
The travel food and beverage operator said revenues reached £1.3bn ($1.6bn) in the six months ended 31 March 2023, 64% higher than the same period last year.
The ongoing recovery of passenger footfall at major transport hubs worldwide, led by domestic and leisure travel, also saw sales rise to 111% of 2019 levels in the first six weeks of the second half of SSP Group’s financial year.
SSP said it has maintained ‘tight control’ of its costs during a period of ‘significant and ongoing inflationary pressures’ to achieve a strong recovery in half-year EBITDA margin to 6.9%, compared with 1.8% last year.
The travel concession group cited strong performances in its North American and Rest of the World divisions for driving underlying operating profit to £34.4m ($42.7m) compared to a £36.4m ($45m) loss during the same period last year.
Following notable contract wins at Calgary, Ontario, New York (JFK) and Kuala Lumpur airports, SSP Group said contract renewal activity and net new business wins are now running ahead of pre-Covid levels.
North America, where SSP Group has operated since 2006, is the travel food and beverage operator’s strongest performing region, with revenues at 124% of 2019 levels. Alongside its extensive portfolio of restaurant units, SSP Group also operates Peet’s Coffee at US airports.
SSP Group is seeking to continue sales momentum and unit growth across North America and acquired the concessions business of Midfield Concession Enterprises Inc. in May 2023 to extend its presence at 30 of the largest airports in the US. The deal is expected to generate $100m in additional revenues for SSP.
In Continental Europe, revenues reached 116% of 2019 levels, driven by strong air travel. SSP Group opened a unit at Rome rail station during the period, making Italy its 37th market globally.
In the Rest of the World segment, revenues were 112% of pre-pandemic levels, led by returning passenger footfall, particularly in India, Thailand and Australia.
Meanwhile, sales across the UK and Ireland have ‘strengthened’ but are yet to fully recover to 2019 figures. In December 2022 SSP Group said it expects overall sales in the UK and Ireland, currently at 94% of pre-pandemic levels, to recover by the end of 2023.
SSP Group expects the travel food and beverage industry to remain ‘structurally resilient’ to pressures on consumer spending and forecasts sustained growth in the second half of 2023. The travel food and beverage operator is anticipating full-year revenue and EBITDA reaching £3bn ($3.7bn) and £280m ($347m) respectively, ahead of growth to £3.4bn ($4.2bn) and £375m ($465m) in 2024.
“This has been a strong first half for SSP, and the ongoing revenue momentum across the business means that we are now expecting our performance for 2023 to be at the upper end of our previous assumptions,” said Patrick Coveney, CEO of SSP Group.
“We are continuing to deliver against our strategic priorities. Firstly, we are increasing our focus on the higher growth markets of North America and Asia Pacific. Secondly, the ongoing enhancement of our capabilities across our customer proposition, digital technology, people and sustainability is driving like-for-like revenue growth and helping us to win more new business. Thirdly, we are revitalising our efficiency programme to support profit conversion,” he added.
In the 12 months ended 30 September 2022, SSP Group generated 162% year-on-year revenue growth to reach £2.2bn ($2.7bn).