Adelaide Casino owner SkyCity counting losses
The Adelaide Casino has seen a 21 per cent decline in revenues this month to date, its NZ parent has revealed, as a wider group slowdown sees full year earnings and profit slashed further.
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Unprecedented market conditions driven by the rapid global spread of coronavirus are taking a toll on Adelaide Casino owner SkyCity’s earnings, including a 21 per cent slump in March to-date gaming and non-gaming revenues in SA.
At the Adelaide property, where the group has introduced social distancing by shutting down some poker machines, gaming revenue is down 7 per cent and non-gaming revenue is down 14 per cent relative to internal budgets and expectations.
Revenues across its other Auckland, Hamilton and Queenstown properties in NZ are down between 12 and 43 per cent, with Auckland being the worst hit.
Shares were trading nearly 11 per cent lower at $1.95 at 2.30 AEST.
SkyCity currently estimates an earnings before interest, taxes, depreciation and amortisation (EBITDA) impact of around $NZ55 million in relation to previous guidance for the full year.
The NZ-based company, which is also listed on the Australian share market told investors on Wednesday it has been negatively impacted by the global response to COVID-19, particularly since 28 February when the first case was confirmed in its home country.
With group revenues and visitation down across its properties in Australia and NZ, normalised EBITDA for FY20 is expected to be in the range $NZ230-250 million and normalised net profit after tax in the range $NZ85-100 million.
These ranges are based on the best information currently available and reflect the continued uncertainty regarding the impacts of COVID-19 through to the end of FY20.
The updated guidance also assumes that all SkyCity properties remain open for business.
“These impacts are expected to be exacerbated by the new border controls, social distancing requirements and restrictions on mass gatherings recently imposed in New Zealand and Australia,” SkyCity CEO Graeme Stephens said.
“We fully understand and support the priority to slow the spread of COVID-19 in order to save lives … and we will play our part in working with governments to help and protect
our customers, staff and other stakeholders.
“We anticipate further restrictions on mass gatherings in Australia and New Zealand,” Mr Stephens said.
“We will need to understand these restrictions in more detail as they evolve to ascertain whether they will apply to our properties.
“Additionally, it is possible that a full lock down is implemented in New Zealand and/or Australia, which would lead to the temporary closure of the SkyCity properties.”
The group has already put in a range of social distancing measures across all properties with additional and frequent cleaning of all facilities and provision of hand sanitiser throughout all properties.
The group, which has 5000 employees, is also encouraging staff to take voluntary leave over the next few months and has suspended marketing activity that would drive spikes in visitation.
It will be seeking to employ significantly more people in Adelaide in the lead up to the completion in October of its $330 million expansion and also at its Auckland expansion project, which has been delayed due to a major fire in October last year.
“SkyCity is looking beyond the current challenges presented by COVID-19 and will seek to preserve existing jobs in New Zealand and Australia,” said Mr Stephens.
He reassured investors the group has a “strong balance sheet and is conservatively geared”, in particular after receiving the proceeds from the strategic disposal of non-core assets during 2019.
“It is therefore well placed to withstand the adverse impacts of COVID-19.”
SkyCity will provide further updates to the market as new material information becomes
available.