Sun International nears pre-pandemic performance

Group outlines an ambitious growth plan to be achieved by 2026.
Sun International's Boardwalk Casino complex in Nelson Mandela Bay. Image: Supplied.

Sun International in a business update released on Tuesday says its revenue for the five months to 31 May 2022 increased by 34% to R4.28 billion from the same period in 2021.

The JSE-listed gaming and hotel group said the latest figures are a sign that the business is edging closer to pre-Covid-19 pandemic levels, with South African income in the current period representing approximately 92% of income achieved during the same period in 2019.

Read: Sun International hopeful of resuming dividend payments

“Despite the lower revenues, adjusted Ebitda [earnings before interest, taxes, depreciation, and amortization] and the adjusted Ebitda margin were up on 2019, largely driven by ongoing efforts undertaken by management in 2020 and 2021 to eliminate excess costs and improve efficiencies across the group,” Sun International notes.

The group’s resorts and hotels division reported the largest proportional recovery, with income rising 62.3% to R977 million (2021 period: R602 million).

Its casino business maintained its strength, seeing a 30.6% increase in income to R2.60 billion, from R1.996 billion.

Pandemic blow

The Covid-19 pandemic dealt a heavy blow to businesses in the hospitality and entertainment industry with lockdown measures placing restrictions on gatherings, operating hours and the sale of alcohol.

In 2019, Sun International reported a 49% slump in group income to R6.1 billion and a headline earnings loss of R409 million, which was equivalent to a headline loss per share of 234 cents.

The group’s cost-saving and debt reduction strategy has seen debt in its South African operations decreasing from R6.4 billion at the December 2021 year end, to R5.8 billion in the current period.

“Debt to adjusted Ebitda and interest cover was well within Sun International’s lenders’ covenants and [has] returned to acceptable levels,” says Sun International.

Read: First Covid, now floods empty South Africa’s eastern beach resorts

“Our balance sheet remains in a strong position, and we continue to focus on increasing free cashflows and disciplined capital allocation to maximise shareholder value,” the group adds.

Vision 2026

With Sun International’s South African operations nearing pre-pandemic levels, the group outlined its growth strategy across its segments, which it hopes to achieve by the 2026 full financial year.

Its ambitions include plans to refurbish, upgrade and complete ongoing developments at some of its properties across its segments.

One of the projects is to expand the GrandWest (Casino) Hotel in Cape Town, from a 39-key property to 103 keys.

Although recovery in corporate and international travel remains muted, the group says it is seeing a steady recovery in conferencing, domestic leisure and sports and events-related bookings and footfall.

Read:
Grand Parade returns to its gaming roots
R700m retail and hotel expansion for Nelson Mandela Bay’s Boardwalk Casino

As one of its main strategic priorities for growth, the group says it’s prioritising the phase 3 completion of the 258-unit Sun Vacation Club development, to which it plans to allocate R850 million over the next three years.

SunBet’s growth

Online sports betting and gaming platform SunBet is currently Sun International’s fastest-growing business. The platform is attracting a younger, tech-savvy customer-base in the mid-to-high income segment.

Capitalising on this growth, the group says it aims to increase its customer base and grow the businesses revenue six-fold by FY2026.

During the five-month period, Sun Bet marked a 40% increase in income to R105 million from R75 million in the previous comparable period.

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