Softer market conditions have been blamed for a 73% drop in bottom-line interim profit for SkyCity Entertainment Group.
The casino and hotel company made $6.1 million net profit after tax for the half-year to December 31, 2024, down on the previous corresponding half-year of $22.5m.
Revenue dropped 5% from $442.8m to $422m and group ebit was down 22% from $144.3m to $113.1m.
Total revenue was lower due to a 12% drop in Auckland gaming revenue, the business said.
“We continue to operate in challenging market conditions with subdued consumer confidence,” said CEO Jason Walbridge today.
Auckland gaming revenue had been impacted by a five-day closure last year.
SkyCity said this month said it would not open its new NZ International Convention Centre until next February.
Fletcher Building managing director Andrew Reding reiterated in yesterday’s half-year result that the company was now in the complex commissioning phase and would finish work there by June 30 this year.
Forsyth Barr analysts Andy Bowley and Paul Laxton Koraua put an underperform rating on the stock. In a 1H25 preview headlined “Playing the cards it’s dealt”, they issued a downbeat forecast.
“We expect a material decline in its underlying NPAT on the prior year.
“In tandem with structural issues, cyclical challenges continue to weigh on operational performance, being increased compliance costs, mandatory carded play implementation, and management’s desire to strengthen the balance sheet,” they wrote.
A revised FY25 guidance range is also anticipated, due to the delay of the majority of New Zealand International Convention Centre pre-opening costs of around $11m into FY26.
Cyclical demand pressure was weighing on average spend per visitors on both gaming and non-gaming activities.
Consumer data still suggested the domestic consumer backdrop was challenging, the analysts said.
The business was committed to mandatory carded play by mid-July.
The company made a $143.3m reported net loss after tax for the year to June 30, 2024, citing a tough operating environment.
Chief executive Jason Walbridge referred to “a very challenging financial year”, soft economy, cost-of-living pressures here and in Australia and various regulatory matters.
The company has suspended dividend payments until 2026.
Net debt increased from $444m in FY23 to $663m after the buy-back of the Auckland car park concession and core capital expenditure during the year of $64m.
The company confirmed previous FY25 earnings guidance of underlying group ebitda of between $245m and $265m and no dividend expected for FY25.
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.
Anne Gibson has been the Herald’s property editor for 25 years, written books and covered property extensively here and overseas.
Will anyone on the exec team walk the plank?