SPP Group PLC (LON:SSPG) rose in early trading Thursday after the group made a positive start to the current financial year.
The FTSE 250 firm, which operates food and drink outlets in travel locations, said during its first quarter from 1 October to 31 December revenues had increased by 7.6% in constant currency, with like-for-like (LFL) sales and net contract gains rising 2.5% and 3.8% respectively.
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The acquisition of German travel concessions firm Stockheim, which was agreed in December 2017, had also added a further 1.3% to sales, the company said.
Trends in LFL sales growth had remained consistent with the previous year across the UK, North America, and the Rest of the World (ROW), however LFL growth in continental Europe had been affected by the 'Gilet Jaunes' protests in France towards the end of the quarter and by redevelopment activity at some sites.
For the full year, SSP said it expects LFL sales growth of between 2%-3%, unchanged from previous guidance.
The net contract gains had been “slightly ahead” of expectations and were driven primarily by significant contributions for North America and the ROW.
For the rest of the year, SSP expected net gains to be “a little ahead” of its previous guidance of 3%, reflecting new contract wins in the first quarter.
The group added that if the current spot rates on currencies continued throughout the remainder of the year, a positive currency impact of around 1% on full-year revenues was expected.
“The new financial year has started well and the pipeline of new contracts is encouraging. Whilst a degree of uncertainty always exists around passenger numbers in the short term, we continue to be well placed to benefit from the structural growth opportunities in our markets”, the company said.
Firm still “high-quality play”, says broker
In a note to clients, analysts at broker Shore Capital reiterated their ‘Buy’ rating on the stock saying SSP was “a high-quality play in a structurally attractive growth market”.
The broker also reiterated its guidance for the 2019 financial year, forecasting pre-tax profits of £199.5mln and earnings per share of 27.5p which were predicated on a 20 basis point improvement in operating margins.
Analysts added that their estimated could prove “conservative” if the company continued to outperform on both net new contracts and margins.
In late-morning, SSP shares were up 0.5% at 682.8p.
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