Sun City the star of the Sun group
Refurbishment pays off, but Times Square results a kick in the solar plexus
Gaming and hotels giant Sun International saw a resurgent performance from Sun City — one of its oldest properties — but reported an underwhelming start at its new Times Square mega-casino precinct.
Results released on Monday covering the year to end December showed Sun City as the star performer, with a 7% increase in revenue, translating into a 58% gain in ebitda (earnings before interest, tax, depreciation and amortisation) at R318m.
Sun City benefited from extensive refurbishments, with casino revenue up 11% and hotel occupancy increasing from 68% to 72%, with an average room rate hike of 4%.
Sun will be desperately hoping for a marked improvement from Times Square after a soft start to trading. Sun has already spent R4.2bn on this casino and entertainment precinct in Menlyn near Pretoria, which is one of the main reasons the company is contemplating a rights offer to reduce debt levels that have stretched over R11bn in SA.
The Times Square complex generated revenue of R827m for nine months of trading, with R744m derived from the casino operation. Times Square’s ebitda came in at R184m – but a R345m loss after tax and interest was incurred. Sun’s share of the loss was R296m.
Sun indicated that although the Gauteng gaming market grew strongly in the second half at 4.4%, Times Square captured a less-than-expected market share of around 13%.
Sun CEO Anthony Leeming said recent trading had reflected growth in activity and visitation at Times Square after the opening of the arena in November 2017. But a lower win ratio at the new venue meant growth did not translate into revenue.
Leeming believed Times Square gaming revenue could grow after the opening of the hotel at the end of this month ahead of the Easter long weekend. Sun’s other large Gauteng-based casino precinct, Carnival City, had a weak showing, with revenue and ebitda down 9% and 19% respectively.
But Leeming noted a marked improvement in the second half of the year, with revenue down only 3% compared with the 14% decline in the first half. He said the improvement was driven by a revamp of the retail and food and beverage offerings.
Sun’s flagship casino, GrandWest in Cape Town, held the revenue line at R2.15bn, with ebitda slipping 2% R850m.
Sun’s Latin American operations enjoyed mixed fortunes over the trading period.
Revenue from Chile decreased by 5% to R4.1bn, with ebitda down 9% to R1.2bn.
The Sun Nao Casino in Colombia continued to incur losses and was closed in December 2017.
Revenue in Peru increased 6% but ebitda dropped from R45m to R33m.