Shares in SSP (SSP) improved 3% to 272.2p on Friday after the travel food outlet operator assured investors that sales were ‘trending positively again’ in the UK and some European markets.
The welcome news arrived in a mixed first quarter update, in which the FTSE 250 company explained the spread of the Omicron variant around the world over the holiday season and subsequent government restrictions had impacted passenger numbers in many of its markets.
FEELING THE STRAIN
Over the four months to the end of January 2022, SSP’s total group revenues were around 62% of 2019 levels as the Omicron Covid strain continued to impact the travel sector.
After running at 66% of 2019 levels from October to the start of December, revenues slowed to just 57% of 2019 levels in the latest eight weeks to January 2022.
SSP, which operates the Upper Crust and Ritazza franchises as well as running sites for third parties like Burger King and Starbucks in airports and train stations, said trading remained resilient during December before softening in early January.
TRADING STRENGTHENS
Encouragingly, SSP said trading has strengthened in more recent weeks amid the return of rail commuters and the lifting of restrictions in the UK and parts of Continental Europe.
‘Whilst the Omicron variant continues to have some impact on trading,’ explained SSP, ‘we are confident in our ability to manage any short-term volatility and, subject to no further government restrictions being introduced, we are well positioned for the important summer trading period.
‘Our medium-term expectations, which are for a return to like-for-like revenues and EBITDA margins at broadly similar levels to 2019 by 2024, remain unchanged.’
THE SHORE CAPITAL VIEW
Shore Capital, which has a ‘buy’ rating on SSP, called the update ‘encouraging with regards the revenue recovery profile’ and sees ‘cautious optimism’ heading into the second half.
Forecasting a return to positive EBITDA of £65 million for the year to September 2022, the broker concedes ‘the timing and pace of a recovery in travel (especially international) remains uncertain, with a structural decline in business and commuter traffic a consequence of the last couple of years. A return to pre-Covid rail volumes in the UK especially appears a long way off.’
