24th May 2022 18:05
(Alliance News) - Earnings upgrades could be in store for SSP Group PLC as the travel concessions operator welcomed the rise in footfall at UK airports and railway stations.
SSP on Tuesday reported a strong half-year, as the ongoing recovery in travel continues to help the firm move closer to its pre-pandemic performance.
In the six months to March 31, the London-based food and beverage outlet operator more than tripled its revenue year-on-year to GBP803.2 million from GBP256.7 million.
This was back to 64% of pre-Covid 2019 levels, it noted.
Given that its outlets are based in airports and train stations, SSP said the increase was driven by an increase in passenger numbers, led by leisure travel. The recovery of business-related travel has not been as quick as expected, SSP said.
Shares in SSP closed up 7.1% to 252.54 pence each in London on Tuesday. Its share price had dropped from north of 550p upon the outbreak of the pandemic in early 2020.
"This had been led by the Rail sector, at around 71% of 2019 levels, benefiting from a return to office working, as well as strengthening leisure traffic, with the Air sector, at around 62% of 2019 levels, boosted by an extended holiday season in the autumn across the UK, Continental Europe and North America," the Upper Crust food kiosk operator said.
Pretax loss was all but eliminated, narrowing to GBP2.3 million from GBP299.7 million a year before. On a pre-IFRS 16 basis, the underlying pretax loss was GBP55.3 million, narrowed from GBP182.0 million.
SSP said trading since the period has made further recovery, reaching an average of 83% of 2019 levels. It anticipates sales to remain within a range of 80% to 85% of the 2019 levels, and to total around GBP2.0 billion to GBP2.1 billion for the full year.
Looking ahead, SSP expects its earnings before interest, tax, depreciation and amortisation margin to be between 5% and 6% in the remainder of the financial year.
"It's been a long time since anyone upgraded earnings forecasts for SSP, the railway and airport food seller seriously derailed by the pandemic. However, signs of business recovery have gone down well with investors, triggering a 7% hike in the share price following half-year results. Some analysts have signalled they will now nudge up their earnings estimates," said AJ Bell's Russ Mould.
By Arvind Bhunjun; [email protected]
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