(Alliance News) - SSP Group PLC on Wednesday guided to a sharp fall in sales for the second half of the year, but noted operating losses would be at the midpoint of its guidance range due to the implementation of cost-cutting measures.
The FTSE 250-listed owner of Upper Crust, Camden Food Co and Caffe Ritazza said current weekly sales are running at around 76% below last year, representing an improvement from the third quarter, when sales were 95% lower in April and May and 90% lower in June.
This improvement has been driven by continental Europe where weekly sales are 66% weaker than a year before, while in the UK, North America and Rest of the World, sales remain around 80% to 85% down.
SSP has reopened just over a third of its units, ahead of previous expectations.
However, overall sales in the second half of the year are expected to be down 86%, resulting in a reduction in revenue of around GBP1.3 billion compared to the second half of 2019. Underlying earnings before interest, tax, depreciation, and amortization is expected to be between a GBP120 million loss and earnings of GBP190 million, while operating loss is expected to fall broadly in the middle of the GBP180 million to GBP250 million range forecast by the company in June.
"Encouragingly, the extensive management action to reduce the cost base, notably rent, overhead and labour, means that despite the weaker sales, the underlying earnings before interest, tax, depreciation, and amortization and operating loss are expected to fall broadly in the middle of the ranges set out in the interim results in June," it said.
"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," Chief Executive Simon Smith added.
The company had in July said it will cut up to 5,000 jobs.
Looking ahead, SSP said it has recently seen some limited improvement in traffic in a number of regions, with sales currently at around 24% of pre-Covid levels, adding that it "firmly believes" that demand for travel will return and actions taken since February together with the evolving market backdrop, will ensure it emerges a "fitter, stronger leader in the sector".
As at April, cash and drawn available facilities totalled around GBP750 million. Cash usage in the second half is forecast to be between GBP250 million to GBP270 million, leaving the company's liquidity headroom at the end of financial 2020 ending September 30 at GBP480 million to GBP500 million.
Shares in SSP were trading 14% higher at 205.20 pence each on Wednesday morning in London.
By Ife Taiwo; ifetaiwo@alliancenews.com
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SSP Group (SSPG)