SSP Group expects to see an ongoing decline in profits until the end of FY2020 but will take significant action to ensure its survival, it has said in a trading update released today.

Like-for-like revenues across its UK and continental European markets are currently running at 80%-85% lower year-on-year, with the impact at airports being greater than on the rail network, and the group expects this dip to continue throughout the second half of the financial year.

The same level of decline was seen in North America, and it has experienced a 60% fall in revenue across the rest of the world (including the Asia Pacific, Eastern Europe, Middle East, India and Brazil.)

For the month of March 2020, the group expects to see a year-on-year fall of 40% in revenue across the group, which equates to a loss of approximately £125m-£135m, with a corresponding reduction in operating profit of £50m-£60m.

Including the impact of coronavirus, SSP has predicted a decrease in group revenue of 3% on a constant currency basis for the six months ending 31 March 2020, comprising a like-for-like sales decline of 8% and net gains of 5%.

The group is taking several actions including a temporary closure of units, reduced operating hours, temporary lay-offs and significant salary reductions across senior management in order to protect profit and cash.

The majority of rent payments are being paid on a fully variable basis (as a percentage of revenue), and the group is having ongoing discussions with landlords to further rent relief.

Capital expenditure is to be reduced by approximately £10m in H2 2020, and it has suspended its previously announced share buyback of up to £100m.

Having agreed a (up to) £122.5m 18-month bank facility on the terms of the group raising new equity – which it intends to do through a variety of measures including a non-pre-emptive placing of new ordinary shares of 1 17/200 pence each in the capital of the company and a £760,000 cash injection from its senior team – the group has said it will have sufficient liquidity to deal with the overtly pessimistic trading scenario.

“We’ve had to take significant action to reduce our costs while doing everything we can to limit the impact of this on our colleagues,” said Simon Smith, CEO. “However, we have had to close a number of units given the extent to which passenger numbers have decreased. These decisions have not been taken lightly and I sincerely hope that we can re-open our units and welcome back our teams as soon as possible.”

“We also welcome the actions announced by HM Treasury to support individuals and businesses though the COVID-19 crisis. This together with the management action we are taking, and the additional funding arrangements announced today will put us in a strong position to manage through this crisis and be in the best shape possible to return to growth once the market begins to recover.”