SSP Group Q3 sales softer than expected, but maintains full-year outlook

Investing.com -- SSP Group (LON:SSPG) on Tuesday reported slower-than-expected third-quarter sales growth, with performance weakening in the UK and Asia Pacific regions, though the company maintained its full-year guidance.

The travel food and beverage operator saw group sales increase 6% year-on-year in constant currency during Q3, below analyst expectations of 7%.

Like-for-like sales grew 3%, slightly under the 3.5% forecast, while net contract gains and acquisitions contributed 5% to growth.

SSP experienced a 2% negative impact from its exit from German Motorway services and the deconsolidation of its AAHL joint venture in India.

Like-for-like sales growth slowed to just 1% in the final seven weeks of the quarter, compared to 5% in the first six weeks. However, performance improved to 3% in the first three weeks of Q4.

By region, the UK and Ireland along with Asia Pacific and Eastern Europe Middle East underperformed expectations. The UK was affected by M&S systems issues following a cyber incident, though sales have since recovered.

The Asia Pacific region saw softening toward the quarter’s end due to rising geopolitical tensions and air safety incidents.

Continental Europe faced weaker consumer spending, particularly impacting the rail sector, while North America experienced lower passenger numbers year-on-year but performed slightly better than analysts expected.

Despite these challenges, SSP maintained its full-year constant currency guidance, citing an acceleration of cost efficiency initiatives and improved Q4 trading.

The company expects revenue of £3.7-3.8 billion, pre-IFRS 16 operating profit of £230-260 million, and pre-IFRS 16 earnings per share of 11.5-13.5p.

Current foreign exchange rates would reduce revenue by approximately 1.8% and operating profit by 4.4%.

SSP Group remains a market leader in global food and beverage travel concessions, with RBC analysts noting its strong space growth story, particularly in the US, despite near-term challenges in the travel segment.

The company is expected to see improved European margins and free cash flow growth as it expands its unit pipeline and completes pandemic-related deferred maintenance.

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