New contracts drive 23% profit growth for SSP Group

New contracts and robust sales growth have driven a 22.7% rise in underlying operating profits at travel site operator SSP Group.

The global food and beverage business, which operates UK travel sites for brands including Starbucks and Upper Crust, reported operating profit of £195.2m on a constant currency basis for the year to 30 September 2018. Total revenue increased by 9.5% to £2,564.9m.

In the UK, the business reported a 1.3% increase in revenue to £798.1m, with underlying operating profit up 9% at constant currency to £89.5m. Like-for-like growth in the UK air sector was affected by the collapse of Monarch Airlines and capacity reductions at Ryanair, SSP said. The rail sector “remains softer” and was impacted by station developments and closures, most notably in London.

A continued rollout of operational efficiency initiatives also helped to mitigate inflationary cost pressures, due to rises in the National Minimum Wage, National Living Wage and higher business rates.

SSP added that it had continued to develop its brands, which, in the UK, saw it launch the first Urban Express outlet – a new food and retailing offer that includes partnerships with Berry Bros. & Rudd for wines, Cook for ready meals and Foyle’s for books.

“SSP has delivered another strong performance in 2018. Operating profit was up 22.7% at constant currency, driven by good like-for-like sales growth, substantial new contract openings and further operational improvements,” said Kate Swann, CEO of SSP Group.

“The new business pipeline is encouraging and underpins our confidence in future growth. Our cash flow is robust and, in addition to investing £144m into the business this year, our highest to date, we are also returning c. £150m cash to shareholders.”

She added that the new financial year had started “in line with expectations” and that SSP Group was well placed to benefit from the structural growth opportunities in its markets.

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