SSP Group plc (LON:SSPG), a leading operator of food and beverage outlets in travel locations worldwide, will today hold its Annual General Meeting and, ahead of this, has issued an update to the market on current trading and the impact of the COVID-19 virus (Coronavirus).
In the current financial year trading in the UK, Continental Europe and North America, which together account for approximately 86% of Group revenue, has been in line with our expectations. In the Rest of the World, which accounts for 14% of group revenue and comprises the Asia Pacific region, India and the Middle East, we have seen an impact from the COVID-19 virus.
Since the escalation of the virus during January, our immediate priority has been the health and safety of our colleagues, customers and partners based across China and the Asia Pacific region. We have worked closely with our teams and local authorities to implement a range of additional health and safety policies and protocols covering hygiene, travel and quarantine periods, in order to keep people fully informed and as well protected as possible against infection.
In terms of the impact at the airports in which we operate across the region, in China we have seen sharp declines in both domestic and international air passenger numbers, which are currently running c. 90% lower YOY. In Hong Kong passenger numbers are c. 70% lower YOY and across a number of our other Asia Pacific countries, including Singapore, Thailand, Taiwan and the Philippines, passenger numbers are between 25% and 30% lower YOY. Elsewhere, we have also seen some impact at our airports in Australia, as well as at major travel hubs in the Middle East and India, although to date this has been less severe.
In response to the sharp fall in sales in China and across the Asia Pacific region, we have been working with our clients to maintain appropriate service levels, whilst taking all the necessary action we can to reduce costs, including the temporary closure of units and reduced operating hours.
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.
Summary and outlook
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. SSP Group 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.
