The Omicron Covid variant may have wobbled travel food retailer SSP Group’s ongoing recovery, but investors remained unshaken this week by a second £400m loss and the threat of further travel disruption.
The Upper Crust owner, which runs food outlets in travel locations across the world, on Wednesday revealed pre-tax losses for the year ended 30 September totalling £411.2m, which represented a modest improvement on the £425.8m loss in the previous year.
Group revenues fell back 41.8% to £834.2m, which is more than 70% lower than before the pandemic hit.
However, SSP – which last week revealed it had appointed Greencore boss Patrick Coveney as CEO – pointed to improving trends as the travel market continued to recover. Revenues improved from 21% of 2019 levels at the end of the first half to 53% by the end of the year, led by a recovery in domestic and short-haul leisure traffic in North America and more recently Europe and the UK.
This recovery has continued in recent weeks, with sales in the first nine weeks of its new financial year averaging approximately 66% of 2019 levels and remaining at 65% in the first week of December despite rising concern over Omicron.
SSP said it was confident in its ability to manage any short-term volatility created by Omicron and stuck with guidance that it expected to return to 2019 levels by 2024. It said a further 800 sites were operating again since the beginning of June, taking the total sites open to almost 2,000, approximately 72% of the estate.
Shares closed on Wednesday 2.7% higher at 239.6p after the results surpassed broker expectations, having bounced back more than 12% since the 15.7% share price crash on Omicron fears on 26 November. However, the shares remain a long way off pre-pandemic prices of above 550p and even the 352p recorded in April this year.
Broker Goodbody said the share price did not reflect the extent of its recovery and market share opportunity. “We believe group revenue will recover quickly as travel normalises,” it said. “In addition, SSP will benefit from the structural trend of airports outsourcing to scale operators.”
Shore Capital commented: “On a full recovery in revenues, we see the opportunity to outperform on both new business growth and margins… a lot of uncertainty is already factored into the current valuation.”
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