Travel recovery boosts SSP sales to half pre-Covid levels but Upper Crust owner and rail and airport food specialist says 40% of outlets are still shut
The ongoing travel recovery has boosted sales at Upper Crust owner and airport and railway station concession specialist SSP Group, but it cautioned investors that its own path to recovery ‘remains uncertain’.
SSP shares slipped almost 5 per cent as it revealed today that its revenue over the past week was at around 53 per cent of 2019 levels, and is set to be 47 per cent of pre-Covid levels for the four months to 30 September.
As well as its own brands including Upper Crust and Ritazza, SSP creates bespoke and local-influenced food and drink offerings at travel hubs, and runs concessions for major names, including Jamie Oliver, Burger King, Starbucks, and Yo Sushi.
The firm reiterated its April projection that sales and profits will not return to pre-Covid levels until 2024 and said just six in ten of its premises are currently open.
Lockdowns and travel restrictions have hampered SSP’s recovery but it says sales are rising
In June, SSP reported a pre-tax loss of nearly £300million for the six months ending March, as Covid-19 restriction caused its UK business to experience a near 90 per cent decline in revenue.
But SSP, which operates locations across train stations and airports, said it has benefitted from increased passenger numbers since then.
The group has reopened approximately 60 per cent of its outlets, up from around 30 per cent at the end of the first half of 2021.
But SSP said the ‘pace of the recovery remains uncertain’ and it is therefore expecting a ‘slightly slower recovery in sales’ in 2022, when it anticipates profitability to return.
It added: ‘The out-turn will depend on a number of external factors including the pace of the recovery, higher input cost inflation, the impact of labour availability and the extent of government support schemes.’
As the travel sector continues to recover, the group expects to generate an additional 10-15 per cent of net contract gains over the medium term, and to ‘drive further business growth and to capitalise on the recovery’.
SSP reported a stronger recovery in revenue in Europe, North America and the UK over the summer compared to the rest of the world, where slower vaccinations and continued restrictions hampered its business.
As a result, SSP said it would likely break even for the second half of the year after a first-half loss.
Analysts at Peel Hunt said SSP ‘has a track record of managing forecasts well, delivering on cost savings and generating contract gains’.
Peel hunt upgraded its SSP pre-tax profits forecasts by £50million for 2021, but cut its 2022 forecasts by £100million ‘to reflect ongoing travel uncertainty and increased cost pressure’.
It said: ‘Our positive stance is based on an unchanged three-year view of rising leisure travel offsetting a possible permanent reduction in business travel.’
SSP shares are currently trading at 275.4p, having fallen 4.9 per cent this morning. Peel Hunt has maintained its buy rating with a target price of 350p.