Sun International hit by Chilean protests
Several properties have been damaged and operations were curtailed by political and social unrest in the Latin American country
Sun International’s Chile-based gaming business Sun Dreams has been hit by civil protests in the Latin American country, with several properties suffering damage.
Trading conditions there deteriorated significantly towards the end of 2019, the gaming group said on Friday.
Earnings before interest, taxes, depreciation, amortisation, and restructuring or rent costs (ebitdar) for the year to end-December at Sun Dreams is expected to fall 5% to R1.29bn, the group said, partially offsetting an improved performance at its SA operations.
A 12% fall in the ebitdar contribution from Chile was partially offset by positive contributions from operations in Peru and Argentina, with Sun International saying Sun Dreams showed “tremendous resilience” in the face of the unrest.
The social unrest in Chile resulted in damage to several properties “and significant deterioration in trading conditions during October and November”. Sun International said it has reduced net debt in Latin America from R4.3bn to R3.8bn.
Sun Dreams operates a number of casinos, hotels, as well as entertainment and food and beverage facilities in Central and South America.
Sun International, which is expected to release its full-year results in March, expects to report a 3.7% rise in group revenue from R16.6bn to R17.2bn for the period. It attributes the increase to improved contribution from SA operations and the addition of recent acquisitions in Latin America.
The group’s SA business increased revenue by 2% to R11.5bn. It said it had benefited from the continued ramp-up of the flagship Time Square property in Pretoria, while it has seen above-market growth at its Sibaya Casino in KwaZulu-Natal, as well as at its SunSlots and Sunbet gaming operations.
“This was partially offset by weaker performances at Grandwest casino in Cape Town and Sun City, which are in the early stages of full operational turnaround plans,” Sun International said.
Headline earnings per share are expected to rise to between 580c and 622c, from 213c previously.
On Friday, Sun International’s share price was up 4.13% to R31.50, its largest one-day gain since December 17 2019.
With Siseko Njobeni.
Update: February 28 2020
This article has been updated with company comment and share price information.