SSP Group speculate over coronavirus as Asian business faces bruising

SSP Group PLC (LON:SSPG) are the latest firm to tell the market that their results and performance will be hindered by the outbreak of the coronavirus.

The food and drinks brand have specific operations at travel destinations, including airports and train stations. Brands within SSP Group include Upper Crust, Millie’s Cookies, Burger King and Starbucks – to name a few.

The firm noted that February sales in the Asia Pacific region will be bruised by the spread of the coronavirus, which was led to the firm enforcing cost reduction methods.

SSP also noted that it had seen a 90% crash year on year in air passengers in China, and 70% in Hong Kong.

The Asia Pacific region roughly accounts for 14% of the firm’s revenue – and the outbreak of the coronavirus is continuing to dampen global businesses, stocks and indices.

SSP also noted that the full year impact of the coronavirus is ‘uncertain at this stage’.

On a better note, trading was inline with expectations in the UK and continental Europe.

The firm commented today:

“In terms of the financial impact of COVID-19, our expectation is that for the month February sales across the Asia Pacific region (which accounts for approximately 8% of SSP Group revenues) will be approximately 50% lower YOY. Together with the impact in the Middle East and India, this is expected to reduce overall Group revenue in February by approximately £10m – £12m, with a corresponding reduction in operating profit of approximately £4m – £5m.

Clearly the duration of the COVID-19 virus and its impact on global travel is uncertain at this stage, as are its consequences for our financial performance for the full year. We will continue to take all the necessary action as appropriate. Our strategy remains unchanged, and we continue to be well placed to benefit from the significant structural growth opportunities in our markets over the medium term and to create ongoing value for our shareholders.”

Third quarter produces strong results for SSP

In July, the firm saw further progress in its financial performance during the Company’s third quarter.

The Company said it made progress on its strategic initiatives during the third quarter, with revenues up 9.2% on a constant currency basis.

This was comprised of a like-for-like sales growth of 2.0% and net gains of 7.2%. Based on actual exchange rates, Group revenues increased 10.3% year-on-year during the period.

For the first three quarters from 1 October 2018 to 30 June 2019, Group revenues increased 7.6%.

This included; like-for-like sales growth of 2.0%, net contract gains of 5.2% and 0.4% due to the impact of Stockheim. On an actual exchange rate basis, Group revenue increased by 8.3% on-year.

The coronavirus continues to dominate news headlines each day, and the number of individuals is rising. At one point it did seem that the situation was under control, however reports yesterday said that Italy and Tenerife had been affected – which may show that there is still some issues that need to be tackled by global governments.

Shares in SSP Group PLC trade at 572p (-4.19%). 26/2/20 14:17BST.

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