SkyCity Entertainment Reports $143.3M Net Loss Amid Challenging Year

SkyCity Entertainment Group, the listed casino and hotel giant, has reported a net loss after tax of $143.3 million for the financial year ending June 30, 2024. The company, citing a challenging operating environment marked by a soft economy and regulatory issues, experienced significant financial headwinds both in New Zealand and Australia. New Chief Executive Jason Walbridge, who took over last month, highlighted the impact of cost-of-living pressures and various regulatory matters on the company’s performance. Despite the setbacks, SkyCity remains focused on a major transformation programme to de-risk its business and ensure compliance with regulatory requirements.
Minimal Revenue Growth, But Significant Financial Impacts
SkyCity Entertainment Group's group revenue increased by a marginal 0.3% to over $900 million for the year. However, the underlying group net profit after tax came in at $123.12 million, reflecting a decline primarily due to accounting adjustments. These included an A$86.2 million impairment on SkyCity Adelaide and a $129.6 million tax adjustment related to recent changes in tax law.
The company’s net loss, which stood at $143.3 million, was exacerbated by these accounting hits. The tax adjustment, flagged earlier this month, was a significant factor in the final reported figures.
Dividends Suspended Until 2026, Transformation Underway
SkyCity has suspended dividend payments until 2026, citing the difficult economic environment and the financial strains caused by the company’s recent performance. This suspension extends to FY25, during which no dividends are expected to be issued.
At the same time, SkyCity is embarking on a major transformation programme aimed at de-risking the business and ensuring better compliance with evolving regulatory frameworks. Walbridge emphasized the company's commitment to building capability and aligning its operations with stricter regulations, a crucial step as the company navigates heightened scrutiny in both New Zealand and Australia.
Regulatory Challenges and Business Adjustments
SkyCity is grappling with multiple regulatory challenges, including an agreement to shut its Auckland casino for one week next month. This closure is part of a deal with the Department of Internal Affairs, following breaches of the company’s own host responsibility programme. One particular incident involved a gambler at SkyCity’s Auckland casino who spent more than nine continuous hours playing without staff intervention. The casino will close from Monday, September 9 to Friday, September 13, though associated restaurants and tourist attractions will remain operational.
The company has faced similar issues in Adelaide, contributing to a downgrade in its earnings expectations for the 2024 financial year and further complicating its recovery efforts.
Ongoing Projects: New Zealand Convention Centre and Horizon Hotel
Amid its challenges, SkyCity is making preparations for the opening of the New Zealand International Convention Centre, a major project expected to enhance the company’s profile in the events and hospitality sector. Additionally, the company is navigating the regulation of online casino gambling in New Zealand, which presents both opportunities and complexities as the country’s gambling framework evolves.
The delayed opening of the new Horizon Hotel, combined with ongoing issues at SkyCity Adelaide, has contributed to financial pressures. The company’s ability to deliver on these high-profile projects while managing its existing obligations will be critical to its recovery.
Future Earnings Guidance and Financial Obligations
Despite the challenges of FY24, SkyCity has reaffirmed its previous FY25 earnings guidance, projecting underlying group EBITDA of between $245 million and $265 million. This forecast indicates the company’s confidence in stabilizing its operations, even as it navigates difficult market conditions.
However, the company has also been hit by additional financial obligations. Following a recent Australian court decision, SkyCity is now required to pay an additional A$10.3 million in casino duty by January 2024. This ruling, which pertains to an appeal between SkyCity’s Adelaide unit and the Treasurer of South Australia, adds to the company’s financial burden.
Outlook: Managing Risks and Rebuilding Confidence
SkyCity Entertainment faces a critical period as it works to rebuild confidence among investors and customers. The company’s suspension of dividends and regulatory challenges reflect the difficult environment in which it operates, while the new leadership under Jason Walbridge seeks to stabilize the business. The upcoming transformation programme, along with the development of major projects like the New Zealand International Convention Centre, are key to the company’s long-term recovery.
At the same time, managing financial obligations, improving regulatory compliance, and navigating external pressures will be essential to restoring profitability and maintaining investor confidence. While SkyCity has reaffirmed its future earnings guidance, the challenges ahead remain significant.
- Log in to post comments