Reduction in Gambling Spending Causes Sun International Profits to Drop
, a South African hotel and casino group released its financial report for its first half fiscal year ending 31st
December and the report indicated that there has been a drop in profits attributed by the reduction in gambling spending and an increase in labor costs.
In its report, it indicated that the casino growth has dropped in South Africa with gambling revenue having increased by 1% to R4.2 billion and group revenue with an increase of 3.6% up to R5.4 billion.
77% of the total group revenue was attributed by company’s SA operations, 13% from other operations outside South Africa – Monticello Casino in Santiago, Chile and 10% from other African operations. With its fiscal half year end report, the company experienced a drop of 21% to R302 million in its net income.
In Cape Town, the popular property – GrandWest Casino had a 6% increase up to R999 million in revenue whilst Sun City was R720 million and Durban’s Sibiya Casino was R555 million. Carnival City in Gauteng which is the strongest competition dropped 6% to R523 million and EBITIDA dropped by 10% to R156 million. Total revenue of R549 million was from the rest of Africa.
The newly launched sports betting site by Sun International, Sunbet did not break its earnings and Sun acknowledged saying that, ‘it is still small but it’s improving strongly in its business levels.’
The labor costs also contributed to the reduction of profits seeing a 14% increase to R1.25 billion of the Employee costs in H1 and recent developments have emerged seeing Sun in talks with labor groups and planning to dismiss a quarter of 1,700 of its labor force as part of a restructuring initiative. The Chief Executive Officer of Sun International, Graeme Stephens said, “We hope that this measure will give a few points to the overall trading margins.
“We are still looking for alternative gaming assets that can improve our profits in the next upcoming financial year report.”