(Alliance News) - SSP Group PLC is likely to have returned to profit in the final quarter of its financial year after an "encouraging" second half performance, analysts at Shore Capital said, but investor attention will be on the risks to recovery posed by the Omicron variant of Covid-19.
SSP operates food and drink outlets such as Upper Crust in airports and railway stations. It has concessions in 180 airports and 300 railway stations in 35 countries around the world.
On Wednesday next week, SSP will report the results for its financial year that ended on September 30. In the year that ended September 2020, SSP swung to a pretax loss of GBP425.8 million from a profit of GBP197.2 million the year before. Revenue fell by 49% to GBP1.43 billion from GBP2.79 billion as the virus pandemic shut down travel.
At the six-month stage of the most recent year, SSP booked a pretax loss of GBP299.7 million on revenue of GBP256.7 million. Revenue dropped by almost 80% from a year before.
Shore Capital expects SSP next week to report a full-year loss at the earning before interest, tax, depreciation and amortisation level of GBP109 million, widened slightly from GBP98 million the year before. Revenue is forecast to fall to GBP832 million.
This would represent revenue of about GBP575 million in the second half, double what SSP made in the first.
Shore expects Ebitda to recover to the financial 2019 level of GBP327 million by financial 2024. In financial 2022, it expects revenue to reach two-thirds of 2019's, bringing an Ebitda profit of GBP65 million.
"Omicron is a clear risk to the pace of progress in the current financial year, especially with regards international travel and border restrictions," Shore analyst Greg Johnson commented. "A slow recovery over the winter has already arguably been built into our more cautious forecast for FY22, although the impact is impossible to gauge at this stage."
Shore rates SSP shares a Buy with a price target of 223 pence. The stock was quoted at 220.90p, down 2.0%, on Friday afternoon in London.
By Tom Waite; thomaslwaite@alliancenews.com
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SSP Group (SSPG)