Shares in travel food outlet operator SSP (SSPG) soared over 14% to 207p despite the company saying it expects second half sales to plunge 86%, with its losses in line with forecasts and cash burn not as bad as previously expected.

The market was seemingly most focused on the fact Upper Crust owner SSP forecasts for operating earnings loss at the midpoint of its guidance range as a result of cost cutting measures, including job cuts, while its cash burn is set to be lower than prior guidance.

In a pre-close trading update for the second half of its financial year between 1 April and 30 September, SSP said underlying earnings before interest, tax, depreciation and amortisation (EBITDA) losses for the six months through August were expected in the middle of the £120-190 million range outlined by the company in June.

The FTSE 250 firm said it had re-opened around 1,100 units, or just over a third of all its units, which was ahead of expectations.

However, it added that the unprecedented impact on the travel industry means that ‘with regret’ it will make ‘considerable job losses in order to protect the business.’

SSP shares gained despite the latest coronavirus flare-up potentially derailing its recovery plan, with sentiment towards getting on a train or going on a plane likely to remain fragile and therefore impact footfall in SSP’s train station and airport outlets.


Shore Capital analyst Greg Johnson pointed to SSP’s ‘encouraging’ cash burn in the second half, which has been significantly lower than prior guidance, with net cash usage of £250-270 million in the second half compared to the £340-440 million expected at the interims in June.

Johnson said, ‘With cash usage of £250-270 million SSP’s year-end liquidity is expected to be in the region £480-500 million. With cash burn of £25 million per month we believe that the group retains significant liquidity were current trading conditions last well into the next financial year.’

AJ Bell investment director Russ Mould highlighted that SSP also generates revenue from other parts of the world where the pandemic is at different stages of being, or not being, under control and added that ‘this diversification of earnings could be to its advantage.’

In its outlook, SSP also said it ‘firmly believes’ that demand for travel will return and that the actions it has taken since February, together with the evolving market backdrop, ‘will ensure SSP emerges a fitter, stronger leader in the sector.’


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Issue Date: 23 Sep 2020