SSP Group: Upper Crust owner reports ‘significant increase’ in profitability

The travel food specialist behind Upper Crust SSP Group has reported a boost in revenue, with UK sales supported by demand for air travel and easing rail disruptions.

Revenue grew by 17 per cent for the year to 30 September, with full-year operating profit expected to be £210 to £220m, up around 30 per cent year on year.

SSP’s operating margin was six per cent, up by 0.5 per cent on a constant currency basis year on year.

SSP, which operates franchises of well-known cafes and sandwich shops like Upper Crust, Starbucks and M&S in transport hubs across the world, said that sales growth was particularly strong in Australia and Hong Kong.

In the UK, sales grew by 12 per cent driven by high demand at airports, plus less disruption in rail hubs as strikes eased and “strong operational execution throughout the peak summer period”.

Sales in continental Europe, which were up seven per cent, were “behind [SSP’s] expectations”.

Demand in France was negatively impacted by the Olympics, while demand from German motorway businesses was “weak”.

Patrick Coveney, chief of SSP, said: “There has been good trading momentum across our business throughout Q4. Our North America, Asia Pac & EEME regions have continued to perform ahead of, or in line with, our plan and we have seen a material improvement in the performance of our UK business. 

“We have had challenges in some parts of our Continental European business, which we are addressing through a series of actions that will build margins. Overall, this year, we expect the Group to deliver a significant increase in year-on-year profitability and margins. 

Coveney added: “Our focus is now on optimising the performance of our business, building returns on the high level of recent investment, and the delivery of sustainable and compounding growth and returns in the years to come.”

Earlier this year, the group also stated its willingness to work with the rail watchdog on recommendations contained in a report on its retail landscape.

In June, the Office of Rail and Road found there to have been a lack of competition between retail providers, allowing outlets in retail settings to push up prices. But the ORR stopped short of referring them to the Competition and Markets authority.

Shares in SSP have fallen 8 per cent in the last month and more than 31 per cent in the year to date.