Jacob Zuma’s gambling with the economy in March hit Tsogo Sun in April
Tsogo Sun said its South African casino business suffered in April as the firing of finance minister Pravin Gordhan weakened consumer confidence, leading to many gamblers staying at home.
"March was a good month for us, but April was very tough," CEO Marcel von Aulock said on Wednesday. "We put a lot of that down to a change in sentiment in the South African economy."
The owner of Johannesburg’s Montecasino and Gold Reef City entertainment complexes expects earnings growth to track the economy, and sees no sign of a pick-up because of internal fighting within the ANC, the CEO said.
The continent’s largest gaming and hotels company is "extremely well-placed" for an eventual upturn, having added betting machines to venues and bought new properties, he said.
President Jacob Zuma fired Gordhan in a Cabinet reshuffle at the end of March, causing the rand to weaken and bond yields to rise.
Both S&P Global Ratings and Fitch Ratings subsequently downgraded the country’s credit rating to junk, citing uncertainty over policy continuity and political instability. SA is expected to grow 0.8% in 2017, compared with the sub-Saharan African average of 2.6%, according to the International Monetary Fund.
Tsogo Sun shares fell 1% to R24.30 as of 9.50am in Johannesburg, extending the 2017 decline to 12%. That values the company at R25bn.
Sales rose 8% to R13.2bn in the year to the end of March, lifted by a 28% increase in hotel revenue, the company said in a statement. Revenue from gaming after paying out winnings, known as the gaming win, grew a "disappointing" 2% during the year, Tsogo said.
Earnings per share excluding one-time items increased 6%. Tsogo Sun raised the 2017 dividend 6% to R1.04 a share.