SSP Group UK trading hit by rail strikes in Q1

SSP Group has seen its UK sales performance weakened by rail strikes in the first quarter of FY23, as revenues hit only 83% of 2019 levels at £215m. Its overall Q1 performance in the region reflected both the seasonally higher weighting of rail and the impact of more industrial action in December and January, according to the group. Nonetheless, group sales in the first quarter hit £871m, representing a strengthening of performance to 103% of 2019 levels, with revenues tracking above 2019 levels in North America, Continental Europe and the Rest of the World. The group said the “encouraging” revenue performance was driven by a further recovery in passenger numbers across its regions, led by strong leisure travel demand over the extended holiday season. This momentum continued through the autumn and into the winter, “demonstrating a resilience to the broader pressures on consumer spending”, and business and commuter travel also recovered, though at a slower pace. In its latest trading update, the group said it has maintained revenue momentum and “actively mitigated inflationary pressures to deliver a strong conversion of sales to profitability”. Despite the impact of industrial action in the UK rail network, it added that strong trading across other regions means it remains “on track” of previous guidance. It still expects revenues to be in the region of £2.9 to £3bn, with corresponding EBITDA in the region of £250 to £280m. This guidance includes a contribution from a pipeline of new outlets which are expected to add approximately £550m to revenues by 2025, compared to 2019. Patrick Coveney, CEO of SSP Group, said: "The strong momentum in performance that we saw across the business in the second half of last year has continued into the new financial year, demonstrating the high quality of our business model. We are making excellent progress against our strategic ambitions and are on track to deliver against the planning assumptions we set at the beginning of the financial year. “We have headroom for further growth and returns in multiple markets across the world. In particular, we see significant momentum and potential to accelerate expansion across the North America and Rest of World markets where revenues are now growing rapidly and which together are expected to account for approximately 40% of the group by 2025. In addition to this we continue to expand in a targeted way in the UK, Europe and the Middle East.” He added: “The long-term structural growth in the air and rail travel sectors and the ongoing demand from clients and customers around the world for our brands and food concepts leave us well-placed to create significant value for shareholders for many years ahead. I would like to thank our colleagues, clients and brand partners across the world for the enormous contribution that they make to SSP each and every day."