“Strong fundamentals”: SSP reveals financial results for year ended September 30
SSP Group – a leading operator of restaurants, bars, cafes and other food and beverage outlets in travel locations across 37 countries – has announced its financial results for the year ended September 30, 2024.
Revenue of £3.4 billion (US$4.32 billion) is up +14% (+17% at constant exchange rates), with like-for-like growth of 9%.
Commenting on the results, Patrick Coveney, CEO of SSP Group, said, “We have delivered a strong second half performance and I would like to thank our colleagues, clients and brand partners around the world for all their support.
“SSP has strong fundamentals and benefits from the global travel market’s sustained long-term growth trends. This was clearly visible in the FY24 performance in three of our four regional markets. However, Continental Europe performed below our expectations, which in turn impacted Group EPS and free cash flow.
“As we reach the next phase of our evolution post-COVID and with strong underlying growth across the Group, our focus now is on driving greater value from a strengthened base. In Continental Europe, we are accelerating our profit recovery plan, in particular by building returns from the significant number of recently renewed and extended contracts.”
Across the wider group, Coveney said SSP’s priorities remain on sharpening its performance culture to drive profitable growth and returns, so as to unlock the group’s full potential.
“I am excited about the prospects for our company and look to FY25 and beyond with confidence as we continue to see significant opportunities for SSP to drive compounding long-term growth and deliver shareholder returns.”
Group Financial Highlights (underlying pre-IFRS 16) include:
• Revenue of £3.4 billion (US$4.32 billion), up 17% (on a constant currency basis), including like-for-like growth of 9%
• Operating profit of £206 million (US$261 million), up 32% (on a constant currency basis) and within the range of planning assumptions
• Free cash outflow of £233 million (US$282.4) after acquisitions of £139 million and capital investment of £280 million
• Better than expected net debt of £593 million
FY24 Operating Performance
• Good performances in North America, UK and APAC & EEME, benefiting from strong sales growth and operating margin improvements year-on-year
• Disappointing performance in Continental Europe; with operating profit impacted by slow recovery and strikes in the rail sector, weak Motorway Service Area trading in Germany, the scale of the renewal program and operational execution, including related to the Olympics
• The impact of one off trading headwinds, principally in Continental Europe, mitigated by non-recurring benefits, including client compensation
• Integration of recent acquisitions progressing in line with expectations
• Entry into new country markets: mobilized new contracts in Saudi Arabia and New Zealand; secured new business in Sofia, Bulgaria; entered into previously announced new JV with Taurus Gemilang in Indonesia (post year-end)
Outlook and Plans for FY25
• Action focused agenda in FY25 to enhance performance and delivery of profit, cash and return on capital
• Strong revenue growth in the second half of FY24 sustained in the early weeks of the new financial year with total sales growth of +13% and like-for-like sales growth of 5% (over first eight weeks)
• Planning assumptions for FY25: Revenues of £3.7-3.8 billion, operating profit of £230-260m (both on a constant currency basis)
• Profit recovery plan underway for Continental Europe; planning to build regional operating profit margin from 1.5% to approximately 3% in FY25, rising to c.5% in medium-term
• Near-term actions to deliver returns from c.£690 million investment program over the last two years; capital investment in FY25 reducing to £230-240 million
• Refreshed medium-term financial framework reflecting our capability to deliver sustainable growth and operating margin enhancement, translating into double-digit EPS growth, strengthening returns on capital employed, and future capital returns to shareholders.
Strategic Developments
According to the report, SSP competes in markets that “offer attractive structural growth, driven by favorable demographics and demand for travel, supported by strong supply-side investment in the travel sector. Its strategy has been to optimize these opportunities through a combination of growing in the right channels, markets, and formats and by deploying SSP’s proven operating capabilities and competitive advantages.
SSP has focused on increasing its presence in the higher-growth geographies of North America and APAC & EEME within travel food and beverage, whilst growing more selectively in its mature markets of the UK and Continental Europe. “We have continued to build on our capabilities to drive like-for-like sales growth across all of our markets, focusing on enhancing our proposition to meet customer demands and embracing the benefits of digitization,” the company states.
Prioritizing high-growth markets
• High-growth North American and APAC & EEME markets now represent approximately 40% of Group sales and approximately 60% of Group operating profit
• Key new business wins in North America, APAC and the Middle East; for example, Sarasota and Spokane airports in US (both new clients for SSP), and the recently constructed Noida Airport in India
• Completed a number of acquisitions in North America including the final airport (Denver) of the Midway Concessions deal, Mack II in which SSP acquired eight units at Atlanta Airport and ECG Venture Capital in Canada
• Now operating in 53 of top 200 busiest airports in North America, up from 37 at the end of FY22
• Entry into new markets further expanding our APAC & EEME footprint, with contract wins in Riyadh and Jeddah Airports (Saudi Arabia) and Christchurch Airport (New Zealand) – which are already operational —and at Sofia Airport (Bulgaria) and Vilnius Airport (Lithuania), where we will commence operations next year
• Acquisition of ARE business in Australia, adding more than 60 outlets across seven airports. Post year end, completed an agreement to create a new joint venture with Indonesian food and beverage business Taurus Gemilang, marking SSP’s entry into the country
• Good retention rates on contracts, with significant renewals across Continental Europe and the UK. For example, secured extensions in Oslo Airport where SSP retained its overall share, Liverpool John Lennon and London Heathrow Airports, Marseille Airport, and Tenerife in Spain.
Enhancing business capabilities
• New concepts and formats innovation development, with significant progress this year in SSP’s airport lounge and convenience retail offer; refreshed own-brands including new menu and new visual identity at Upper Crust in UK, which rolls out more fully in FY25
• Launched innovative new concepts with a focus on enhancing customer experiences, including The Independent at Brisbane Airport, Aster & Thyme at Newcastle Airport, and Guy Fieri’s Flavortown Kitchen & Bar at Newark Airport
• Further strengthened partnerships with clients and brand partners; alignment to clients’ needs and goals recognized through enhancement of the group’s global reputation and customer feedback score which has increased further in FY24 from 4.2/5 to 4.4/5 in the year
• Leveraged digital solutions, expanding platform of digital ordering points to approximately 700 units, with 50% of our restaurants in North America now equipped
• Optimization of digital solutions contributing to significant sales growth, with digital ordering ATV outperforming tills by 20% on a global average
• Focus on attracting, developing and engaging our talent to strengthen our organizational capability
Enhancing sustainability
• Continued momentum in delivering tangible progress against our sustainability targets, including exceeding 2025 target for 30% of meals offered by our own brands to be plant-based or vegetarian for the third consecutive year, and reaching 97% of own brand packaging as reusable, recyclable or compostable
• Implementing measures to progress towards net-zero targets, particularly for reducing Scope 3 food-related emissions through partnership with Klimato in the UAE and UK, with the UK refining the Soul + Grain range using Klimato insights, achieving a 15% reduction in the carbon footprint of food sold, while maintaining profitability
• Positive client engagement and feedback, including sustainability being an important factor in contract renewal at Oslo Airport (Norway) and new contract win at Sofia Airport (Bulgaria); sustainability was the most improved factor in the 2024 UK client survey with 4/5 clients saying SSP has made progress, with ratings above competitors; and won notable industry recognition for sustainability initiatives.
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