upper crust ssp

Top story

SSP Group has swung to an interim loss as the beginning of the coronavirus pandemic “heavily impacted” its trading.

For the six months to March 31, the operator food & beverage outlets in travel locations saw like-for-like revenues fall 8.4% to £1.2m and generated pretax losses of £34.3m compared to profits of £54.2m the year before. 

This was due to the negative impact of the early coronavirus outbreak in Asia which affected the last few weeks of the company’s first half. Since then, the spreading of the virus across Europe resulted in trading “deteriorating rapidly” across the entire group, the company said. 

Prior to seeing the initial impact from the virus in China, the company saw like-for-like sales growth of 1.2% during the first quarter, while in the second quarter they dropped 19%.

The business estimated that the impact of Covid-19 reduced its first half sales by approximately £145m - £150m.

CEO Simon Smith said: “Covid-19 has had an unprecedented impact on the travel sector. Our response has been to take quick and decisive action to protect our people and our business, whilst around the world our colleagues have helped and supported their local communities.

“Although challenging, it was a great illustration of SSP at its best and demonstrated the resilience of our teams. I’m immensely proud of what’s been achieved.

“Looking forward, and with sufficient liquidity to manage a pessimistic trading scenario, I believe the actions we have been taking during this crisis will make us a fitter and stronger business, well placed to deliver for all our stakeholders as the travel market recovers.”

To support the business during the prolonged period of no trading, SSP furloughed colleagues, reduced salaries across the senior management and board, reduced discretionary spend and capital investment to a minimum and dropped its interim dividend. 

Looking ahead, SSP said it focuses on reopening the businesses while ensuring employees and customers’ safety. 

“Prior to the onset of Covid-19, SSP had had a good first half, with particularly good progress on net gains and a strong pipeline of new business wins,” SSP added.

“The impact of the virus has been significant, but we have taken all the appropriate actions to ensure that, even with extremely low sales, we have sufficient liquidity to manage through a prolonged crisis and slow recovery.”

The business has also announced that following its decision to defer payment of its 2019 final dividend, it is now offering investors that are entitled to it the opportunity to reinvest the dividend in an offering of new ordinary shares in SSP at today’s mid-market closing price.

”The 2019 final dividend will be paid on 4 June 2020 to all shareholders on the register at the record date of 6 March 2020 and this mechanism will allow them to apply for an allocation of new shares up to the value of their 2019 final dividend entitlement,” SSP explained.

Proceeds from the offering will allow the company to retain parts of the dividend cash in the business and further enhance its cash and liquidity position during this period of ”unprecedented disruption in the global travel market” as a result of the Covid-19 outbreak.

SSP shares opened 2.4% lower at 298.1p.

Morning update

Drinks manufacturer C&C Group has seen strong growth in off-trade sales of its best brands as the coronavirus crisis wiped all on-trade sales since March.

C&C, the manufacturer behind Tennent’s, Magners and Bulmers, said after reallocating resources to manage the shift to off-trade, April and May volumes for Bulmers were down 16% but up 62% in the off-trade. 

Tennent’s saw volumes reduce 42% but rise 41% in the off-trade while Magners total volumes were 7% lower but rose 25% in the off-trade. 

The hospitality shutdown is generating underlying cash burn of €7m per month, net of furlough employee support currently around €5m.

The COVID-19 pandemic presents a challenge of unprecedented scale and uncertainty for our industry and supply partners,” chairman Stewart Gilliland said.

“From the outset of the virus, our priority has been protecting the health and wellbeing of our people, customers, suppliers, business partners and community. The ongoing closure of the hospitality sector has material implications for our business and earnings potential, with approximately 80% of our revenue derived from the on-trade channel.

“An emerging trend from this shutdown however has been an immediate shift in consumption dynamics, resulting in increased demand in the off-trade channel. To capitalise on this behavioural shift, we have reallocated resources behind our Take-Home proposition and seek to optimise our business model in this channel.”

These comments were made as the company’s results for the year to 29 February showed good revenue growth of 3.6% to €227.7m while pretax profits were up 12% to €104.1m.

The FTSE 100 started the day up 1.1% at 6,285.35pts.

Risers saw C&C open uo 4.9% at 208p, Marks & Spencer up 4.1% at 102.90 and Marston’s up 3.5% at 62.87p.

Purecircle opened 3.5% lower at 90p while Naked Wines was down 1.3% at 408.48p and McColl’s dropped 1% at 49.06p.

Yesterday in the City

The FTSE 100 closed up 0.9% at 6,220.1pts as hope persists that the global economy could bounce back from the coronavirus slump more quickly than had been expected.

Tesco ended the day down 1.2% at 229.1p after the announcement of the departure of its chief financial officer Alan Stewart next year.