SSP Profits Dip Amid Travel Disruptions from Middle East Conflict
The food and beverage operator, known for brands like Upper Crust and Millie's Cookies, anticipates lower annual profits due to a decline in passenger numbers affected by ongoing global events.
SSP, the company behind brands such as Upper Crust and Millie's Cookies, has announced that its annual profits are expected to be lower than previously forecast. The revision is attributed to a significant reduction in passenger numbers, exacerbated by the ongoing conflict in the Middle East impacting travel.
The company projects operating profits of £230 million for the current year, a figure below initial expectations. SSP stated that this adjustment reflects a "backdrop of subdued passengers."
Specifically, the conflict in the Middle East, referred to in the notes as the "Iran war," has continued to affect sales in regions surrounding the conflict and in the United States. In the US, like-for-like sales saw a modest increase of 2 percent in the three months leading up to the end of September.
Shares in SSP experienced a 3 percent drop, trading at 182.3, contributing to an 11 percent loss for the year. The company's stock value is now down 70 percent from its pre-pandemic peak.
Despite the challenging environment, SSP's Chief Executive Patrick Coveney described the group's performance as "resilient." Total like-for-like sales for the quarter ending in September increased by 4 percent. This growth contributed to full-year revenues reaching £3.8 billion, a 5 percent rise compared to the previous year.
Passenger numbers in SSP's markets in the Gulf region have shown recovery, returning to 90 percent of pre-conflict levels. However, traffic in the eastern Mediterranean, Asia-Pacific, and Indian regions continues to be impacted by lower volumes of local and connecting passengers.
Coveney noted, "Despite the significant impact of the Middle East conflict on passenger volumes in APAC & EEME, the strength and diversification of our portfolio leaves us well-positioned to deliver group earnings per share for the year in line with current market expectations."
Sales in the UK and Ireland increased by 9 percent, partly driven by strong summer trading and improvements to SSP's outlets, including its M&S Simply Food stores. SSP operates franchised stores for various well-known brands, including M&S, Starbucks, Burger King, and The Breakfast Club.
The company has faced scrutiny from investors, including Irenic Capital Management, regarding its performance. Last September, the New York-based hedge fund reportedly urged private equity firms to consider bidding for SSP, suggesting a potential valuation of 50 percent above its market value.