SSP Group has predicted a bleak H2 outlook as the coronavirus crisis continues to hit sales.

In its pre-close trading update for the 26 weeks to 30 September 2020, the group has reported weekly sales approximately 76% down on 2019.

Although this marks a slight uplift from April-May (-95%) and June (-90%), the group expects overall sales for H2 to be down 86% year-on-year, resulting in a reduction in revenue of around £1.3bn compared to H2 2019.

The sales improvement over the past few months has been primarily driven by a stronger recovery in Continental Europe, where weekly sales are approximately 66% lower year-on-year, compared with the UK, North America and the rest of the world, where weekly sales remain around 80-85% lower.

In the UK, the business has seen some recovery in the air sector over the summer predominantly form leisure customers, albeit considerably lower capacity and renewed quarantine restrictions reduced activity.

The rail sector remained weak during the third quarter, but has started to see a slow recovery, driven by a gradual return in commuter travel as people return to the office.

Globally, the group has reopened just over a third – approximately 1,100 – of its units, which is ahead of expectations set out in its interim results in June.

Despite the weaker sales, management action to reduce the cost base means that the underlying EBITDA and operating loss (on an IAS 17 basis) are expected to fall broadly in the middle of the ranges set out in the interim results in June (-£120m to £190m EBITDA and -£180m to £250m operating loss) for the second half of the year.

Overall net cash usage in H2 is expected to be in the region of £250m to £270m, a considerably better outcome than that anticipated at the Interim results in June of £340m to £440m.

“Covid-19 continues to have an unprecedented impact on the travel industry and on SSP’s businesses in all geographies,” said CEO Simon Smith. “Our first priority throughout this crisis has been the health, safety and welfare of our people and our customers. We have taken rapid and decisive action to reduce cost, preserve cash and to substantially strengthen the Group’s financial position.

“It is with regret that the prolonged nature of this crisis has resulted in us having to restructure and make considerable job losses in order to protect the business. These are always extremely difficult decisions, and we are supporting our colleagues throughout this process.

“We have seen some improvement in passenger demand since the start of the crisis and we have reopened units swiftly and profitably in response to this, with over one third of our units now trading. Our model is flexible and we will continue to align unit openings with demand, meeting the needs of our customers whilst managing operating costs and cash flow tightly.

“In the medium-term we expect to see the gradual return of passenger travel to more normalised levels. The actions we are taking to rebuild the business will enable us to emerge fitter and stronger, positioning us to capitalise on future opportunities and delivering long term sustainable growth for the benefit of all our stakeholders.”

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