Sun International reveals a mixed hand


Sun International reveals a mixed hand

Published Date: 2019-09-03 | Source: Stephen Gunnion | Author: Stephen Gunnion

Sun International reveals a mixed hand

The hotels and casinos group plans a comprehensive review of Sun City due to falling occupancies.

Sun International has reported a mixed first-half performance from its hotels and casinos across SA and Latin America. And it plans to start a comprehensive review of Sun City's operations following a 10% decline in occupancy levels at the resort. Last year, it impaired its investment in Sun City by R306 million due to its continued underperformance.

Releasing interim results, the group said its Time Square casino in Pretoria, Sibaya Casino and Entertainment Kingdom in Durban and limited payout machines operator Sun Slots all performed well. On the downside, it reported declining income from Sun City, Wild Coast Sun in the Eastern Cape, the Windmill Casino in Bloemfontein and the Maslow in Sandton.

The group's SA operations still grew income by 2% to R5.53 billion in the six months to end-June and adjusted earnings before interest, tax, depreciation, amortisation and rent costs (EBITDAR) by 4% to R1.5 billion. Given the difficult trading environment, it said had it focused on reducing costs.

In Latin America, income rose 17% to R2.78 billion, boosted by last year's acquisition of Thunderbird Resorts in Peru and the Park Hyatt Hotel and Casino in Argentina. On a comparable basis, income was in line with the prior period and earnings before interest, tax, depreciation and amortisation (EBITDA) fell 7% to R606 million.

The group's Federal Palace Hotel and Casino in Nigeria incurred a R3 million adjusted EBITDA loss for the period and an attributable loss of R19 million. It said it planned to appoint an advisor to help it dispose of its equity interest in the business.

Overall, headline earnings per share (HEPS) rose 4% to 128c and HEPS increased by 30% to 136c. The adjusted numbers make allowances for the R7 million profit on the sale of its Lesotho management contract as well as a number of other once-off costs. It's not paying an interim dividend so it can reduce debt and fund the acquisition of additional stakes in Sun Slots and Sibaya.

Its shares rose 11% to R43.15 yesterday.

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