SSP swings to profit but warns of inflationary pressures in H2

Upper Crust owner SSP Group on Tuesday swung to an interim core profit as the travel sector rebounded from Covid restrictions but warned inflationary pressures would increase in the second half.

SSP, which operates food and drink outlets at train stations and airports, said sales in the first six weeks of the second half had strengthened to an average 83% of pre-pandemic 2019 levels, driven by a strong recovery in domestic and leisure demand.

The company guided for sales in the second half of the year to be around 80-85% of pre Covid-19 levels and for full year sales to be around £2 - £2.1bn.

Half-year UK sales were at 82% of pre Covid-19 levels, with the air sector boosted by strong leisure demand, and the rail business helped by the return of commuters in increasing numbers.

In the rest of the world, the picture remained mixed with strong recoveries in the Middle East, India, Australia and Thailand being offset by very limited travel activity in China and Hong Kong, which SSP expected to continue in the near term.

Half-year revenue soared 213% to £803.2m as the company reported an underlying core profit of £14.7m compared to an loss of £110.3m in 2021.

On a pre-tax basis the SSP posted a loss of £2.3m compare with a £299.7m loss last year.

“Currently the industry is facing significant inflationary pressures for a combination of reasons including food, commodity and energy prices,” SSP said.

“Where there is low labour availability, this is also resulting in higher labour costs. Whilst to date the impact on SSP has been limited, we are expecting inflation to step up through the second half and into next year.”