Sun International’s SA revenue bounces back after lockdown
Casino and gaming group Sun International, which recently fended off a hostile takeover bid as Covid-19 battered its finances, says it has experienced a strong post-lockdown recovery in SA, and has managed to cut debt.
The owner of the Sun City Resort said on Tuesday that cost-cutting efforts are bearing fruit, and as of end-September the group’s SA debt, excluding lease liabilities, was at R8.5bn compared with R9.6bn at end-June.
“In the face of the current pervasive challenges, Sun International has responded proactively to protect its business in the short term and positioned the group for sustainable recovery over the long term,” the company said in a business update.
SA revenue has shown a strong recovery, Sun International said, after the lifting of the local lockdown, but remains affected by the pandemic, while its international operations are harder hit.
Even under level 1 restrictions in SA, the group has to enforce social distancing, only operating at 50% capacity, while the national curfew has also hit all-night establishments.
Sun International’s alternative gaming operations Sun Slots and Sunbet have been star performers that in October recorded 101% and 122%, respectively, of the revenue they experienced in the same month of 2019.
These operations, which include limited payout machines in bars and restaurants, and sports betting, collectively generated about a fifth of the group’s revenue at the start of the fourth quarter of 2020.
Operations in Latin America remain under a hard lockdown and have been unable to trade since March, while the Federal Palace Hotel & Casino in Nigeria has only recently reopened and has shown a muted recovery.
Sun International’s battle against Covid-19 has caused it to cut staff, shutter some operations and tap shareholders for R1.2bn via a rights offer in August, which almost doubled the amount of its shares in issue.
Also in August, Sun International had agreed to sell its 64.94% stake in Latin American operation Sun Dreams to partner Nueva Inversiones Pacifico Sur for $160m (R2.7bn). That partner had also made a takeover offer for Sun International in June, valuing the group at R22 per share, but this was rejected by Sun International’s two largest investors, Allan Gray and Value Capital Partners, who at the time cited the group’s long-term potential.
Sun International said on Tuesday that cost-cutting efforts are bearing fruit, and as of end-September, the group’s SA debt, excluding lease liabilities, was at R8.5bn compared with R9.6bn at end-June.
“In the face of the current pervasive challenges, Sun International has responded proactively to protect its business in the short term and positioned the group for sustainable recovery over the long term,” the statement said.
In afternoon trade on Tuesday, the group’s share was up 1.35% to R13.48, having lost three-quarters of its value so far in 2020.
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