SkyCity's board has forecast earnings to rise in 2025. Photo / Jason Oxenham
SkyCity's board has forecast earnings to rise in 2025. Photo / Jason Oxenham
Listed Australasian casino giant SkyCity Entertainment Group hadappeared to be in a turnaround phase, its 2023 result well up on 2022.
But now the company has delivered a disappointing $143.3 million reported net loss after tax for its 2024 year due to whatnew chief executive Jason Walbridge called “challenging” times.
The business reiterated its earnings guidance for next year.
For its 2025 year, the board confirmed previous guidance of underlying group ebitda of between $245m-$265m, down on $277.8m for FY24 .
That guidance assumes core stay-in-business capital expenditure in the range of $60m to $70m and NZICC construction capital expenditure of about $70m.
Jarden analysts Adrian Allbon and Mark Seddon issued a first-impression reaction to the result, saying it was broadly in line with their expectations and the company’s pre-guidance.
“Reported result remains messy. Initial thoughts from new chief executive look in line with pre-appointment positioning and balance sheet constraints.
“By property, Auckland and Hamilton in line, Adelaide stronger margins but offset by a weaker online contribution (revenue and cost miss),” they said.
Jason Walbridge started as SkyCity CEO in July 2024. Photo / Jason Oxenham
Earnings for FY25 had remained unchanged, with initial estimates on mandatory carded play impacts soon to be introduced, they noted.
No final dividend will be paid in FY24 but the analysts said this had been pre-flagged so wasn’t unexpected. Progress was made on regulatory overhangs including with the Australian Transaction Reports and Analysis Centre and Department of Internal Affairs in New Zealand.
The new Horizon by SkyCity was forecast to provide $8m earnings in FY25 and the NZ International Convention Centre is due to open next year, total project costs unchanged, costing $76m to complete, the Jarden analysts noted.
Analysts at Craigs noted visitation trends remained steady across the group in 2H24 however, as expected, this result highlighted a continued weakness in electronic gaming machine revenue in New Zealand due to macro headwinds.
“While Auckland table revenue finished the year up 4%, ebitda for the division disappointed at $237m, down 5.8% year on year,” Craigs said.
Offsetting the weakness in Auckland, Adelaide printed a strong 2H result which saw ebitda in FY24 of A$36.5m, +11% annually, “driven by improved electronic gaming machines and stabilised table revenue through the second half, as well as a tight control over costs”.
SkyCity had maintained its FY25 ebitda guidance of $245m to $265m. The consensus of forecasts is that it will deliver $247m, Craigs noted.
“No major updates were provided on the NZICC, due to open in 2025, however findings from the Consumer and Business Services review in Australia are now expected by December 31 and SkyCity has given some initial estimates around the impact of mandatory carded play. Net debt at year-end of $542m was up from $443m in the previous corresponding period, representing net debt/ebitda of 2.3 time,” the Craigs’ analysis said.
Walbridge said a soft economy, cost-of-living pressures here and in Australia and various regulatory matters had impacted the business.
A major transformation programme was underway to de-risk the business with a focus on building capability to ensure better compliance with regulatory requirements, the company said.
Preparations were ready for the opening of the New Zealand International Convention Centre and the carded play here and in Australia.
SkyCity has agreed to shut for a week next month after a deal with the Department of Internal Affairs for breaching its own host responsibility programme.
Shares are trading around $1.56 today, down 2%, giving a market cap of $1.18b.
Anne Gibson has been the Herald’s property editor for 24 years, written books and covered property extensively here and overseas.
