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SSP trading update hints at further recovery

The food and beverage retailer says its operations will have returned to pre-pandemic levels by 2024
September 29, 2021
  • SSP trading update reveals fourth quarter revenues at less than half of their pre-pandemic levels 
  • With cash on the balance sheet, the company is on the road to recovery 

SSP (SSP) investors will be dearly hoping that this morning’s trading update is the last to be blighted by the fallout from Covid-19 restrictions. Operating food and beverage outlets in travel hubs around the world doesn’t lend itself to strong results when global travel remains at just a fraction of pre-pandemic levels. Indeed, in the three months between July and September, revenues were at just 47 per cent of the same period in 2019.

The UK government has announced looser testing requirements for travellers from next week, likely encouraging more people to visit SSP outlets, but these come after the summer tourism season. 

Despite the costly testing rules, SSP did see a marked improvement in the last three months on the financial third quarter (to June) where revenues were just 23 per cent of their level in the final year pre-Covid, and the final quarter of the 2020 financial year where sales were down 86 per cent. The group has also reassured that it has returned to an operating cash inflow in the quarter. 

Domestic operations (which account for 60 per cent of group revenues and include outlets at railways stations and bus stops) are recovering faster than the international business thanks in part to a rising number of staycations, while the international business has a strong pipeline of new tenders. But the company still doesn’t expect operations to return to pre-Covid levels until 2024 and has warned that its recovery in 2022 might be slower than forecast as the travel sector remains incredibly hard to judge. 

The share price - still at roughly 50 per cent of its pre-pandemic levels - reflects the progress the company has made in its four-year recovery. With cash on the balance sheet there could be further gains to be made back to its pre-pandemic level of 500p per share. Buy at 279p.