4th Feb 2022 15:49
(Alliance News) - SSP Group PLC on Friday said that it has seen a good start to its financial year expecting a return to pre-pandemic levels by 2024, though it noted a negative impact from the Omicron variant of Covid-19.
Russ Mould, investment direct at AJ Bell said: "Investors were largely content to look forward to sunnier horizons with a target of returning to pre-pandemic levels of profitability and sales growth by 2024." Mould added that it helped that the business was no longer "haemorrhaging" cash, creating greater confidence that it can ride out any further disruption.
In the four-month period from October 1 to January 30, SSP said that group revenue was at 62% of 2019 levels. Group sales in the last eight weeks from December 6 stood at 57% of 2019 levels.
"The spread of the Omicron variant around the world and the subsequent government restrictions have inevitably had an impact on passenger numbers in many of our markets," SSP added.
In the first nine weeks of its financial year, sales had reached 66% of 2019 levels, SSP said in December.
The London-based food and beverage outlet operator, which operates brands such as Upper Crust, said that trading remained resilient during December and throughout the holiday period before softening in January.
SSP added that in recent weeks, trading has been more "encouraging" with sales now trending positively thanks to the strength in the rail sector, as commuter travel returned.
Despite this, Greg Johnson of Shore Capital said the timing and pace of a recovery in travel - especially international - remains uncertain, adding that a return to pre-Covid rail volumes in the UK especially appears a long way off.
SSP said that its underlying earnings before interest, tax, depreciation and amortisation were positive in the first quarter and its net cash flow was "broadly" neutral. It added that it had fully repaid the GBP300 million it had drawn from the Bank of England's Covid Corporate Financing Facility.
Looking forward, SSP said it was continuing to manage unit openings and closures in response to fluctuating demand. It currently has 1,950 units open, which it says represents 72% of its estate. It expects a return to like-for-like revenue and Ebitda margins at a similar level to 2019 by 2024.
Shore Capital said it viewed today's update as "encouraging" and left its financial 2022 estimates unchanged, though it noted "cautious optimism" heading into the second half. Shore Capital estimates financial 2022 Ebitda of GBP65 million.
In 2021, SSP reported an Ebitda loss of GBP108.3 million. A loss of GBP98.2 million was also reported in 2019.
Shares in SSP were up 0.1% at 264.50 pence each on Friday afternoon in London.
By Heather Rydings; [email protected]
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