Sun International jumps on improved earnings


Sun International jumps on improved earnings

Published Date: 2019-03-14 | Source: Stephen Gunnion | Author: Stephen Gunnion | Comments

Sun International jumps on improved earnings

The hotels and casinos group plans to continue reducing its debt due to strong cash generation at its operations.

Sun International says it should be able to continue reducing its debt due to strong cash generation and a return to profitability.

In a business update yesterday, the hotels and casinos group said it managed to grow gaming revenue last year despite the weak economy and April's VAT increase.

Sun Slots produced strong results, while its new Times Square operation in Pretoria continued to increase its share of the Gauteng gaming market. After a slow start, it said Time Square reported pleasing results during the second half of the year. That wasn't the case with Sun City, which reported weaker results due to the current economic environment and the cancellation of a few large conferences. However, it said forward bookings indicated a recovery later this year.

In Latin America, the group's operations reported a strong second half to 2018, led by its Monticello casino in Santiago, Chile, which recovered following a shooting incident in 2017.

The group said it expected to report a reduced loss of between 5c and 7c per share for the year to end-December from a 248c loss a year earlier. Headline earnings per share (HEPS) are likely to rise to between 190c and 225c from a 180c loss previously. Adjusted diluted HEPS will come in at between 275c and 330c per share from last year's 298c profit. The adjusted number includes amortisation of intangible assets, fair value adjustments and foreign exchange movements, amongst other things.

During the year, it reduced borrowings to R14.7 billion from R15 billion. SA debt fell 19% to R9.2 billion following last year's R1.6 billion rights issue and the generation of strong free cash flows. However, debt in Latin America rose after Sun Dreams raised a 10-year bond to buy out the 20% owned by minority shareholders and the accusation of Thunderbird Resorts in Peru and the Park Hyatt in Mendoza, Argentina.

Its shares closed 3.5% up at R57.54 yesterday.

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