SSP expects coronavirus to hit second-half revenues by up to 85%
SSP has said revenues have been down approximately 80%-85% in the UK and continental Europe over the last week and is also assuming a "very pessimistic scenario" for the second half of the year.
In a trading update, the travel caterer said the widespread travel bans imposed by governments and airline capacity reductions have severely impacted passenger numbers.
As a result, March revenues will be approximately 40%-45% lower year-on-year, which is expected to reduce group revenue by approximately £125m-£135m.
Including the impact of Covid-19 on current trading, for the six months ending 31 March 2020, SSP expects to see a decrease in total group revenue of approximately 3% on a constant currency basis, compared to the same period last year, including a like-for-like sales decline of approximately 8%.
The group said it had already commenced temporary layoffs and "significant" salary reductions would be seen across all senior management, the group executive and group board.
Meanwhile, the majority of rent is being paid, with ongoing discussions with landlords for further rent relief and capital expenditure is to be reduced to approximately £10m in the second half of 2020.
SSP will also defer the payment date of the final dividend to 4 June 2020 and will request shareholders waive their final dividend entitlement, enabling that cash to be retained in the business. SSP's board does not intend to pay an interim dividend for the first half of 2020.
Looking into the second half of the financial year (April-September 2020), the group said it assumes recent trading conditions will likely deteriorate further.
SSP has considered a "very pessimistic scenario assuming an almost total shutdown of the travel market for the whole of the second half of the financial year", with group revenue being down approximately 80% to 85% against the same period last year.
Simon Smith, chief executive of SSP Group, said: "The Covid-19 outbreak is an unprecedented crisis and is having a severely negative impact on the travel sector. These are hugely challenging times and I would like to sincerely thank everyone at SSP for their support and commitment. In common with the sector, we have seen a very sharp drop off in passenger numbers and this has heavily impacted SSP revenues.
"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. 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 reopen 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."
Photo credit: Shutterstock
