SUN INTERNATIONAL is looking to online platforms to unlock further growth in its gaming and sports betting segment as the hotel and resorts division has only started to recover from the impacts of the Covid-19 pandemic.
The company yesterday reported a 100 percent rise in basic and headline earnings per share at 105 cents and 106 cents, respectively, for the full year period ending December 2021.
This was after its income across online gaming and sports betting as well as the hotels and resorts segment for the period under review went up 29 percent to R7.8 billion.
Income for the group’s resorts and hotels segment, despite being up 39 percent for the full year period to end December 31 at R1.5bn, remains 39 percent below 2019 pre-pandemic levels. The segment was affected by restrictions imposed by South Africa to slow down the spread of Covid-19 since the beginning of 2020.
This division has also had to incur an earnings before interest, taxes, depreciation, and amortisation loss of R56 million, which, however, was an improvement on the prior year’s Ebitda loss of R158 million. Post the December 2021 reporting period, demand for the resort offerings has started to improve.
“The easing of lockdown restrictions to Alert Level 1 in March 2021 increased domestic leisure travel demand into our resort destinations such as Sun City and the Wild Coast Sun,” Sun International said yesterday in an announcement of its financials.
Although there has been some recovery in the South African leisure and travel market, “demand from the corporate and meetings, incentives, conventions and exhibitions segments remained weak”.
The food and beverage revenue for the full year period remained well below 2019 levels due to lower occupancies, prompting the company to close some outlets in a bid to manage costs.
Online gaming and sports betting provided some respite for Sun International as the digital platforms continue to grow, “driven by increased internet, smart phone and mobile money penetration” in South Africa.
The SunBet unit said the company had recorded a rapid scale up in revenues “from mid to high-end customers” for the period under review. Implementation of Playtech's Neon casino management system in Sun International’s land-based casinos and on its online SunBet platform now “make up a key strategy” for the group.
In January and February this year, income from the South African gaming portfolios for Sun International were broadly “in line with 2019” while Ebitda earnings for this period “is well up” on the pre-pandemic level.
This demonstrates the industry’s transition into a “more normalised trading environment” although there are worries that a fifth wave of Covid-19 infections could rock the country in the next few months.
Casino operations for Sun International generated adjusted Ebitda of R1.4bn during the period under review on the back of cost saving initiatives that however included “reduced salaries”.
New player acquisitions for SunBet, however, increased by 41 percent compared to the previous year while turnover, up 78 percent, helped casino income to quicken by 33 percent on the 2020 position to R182m.
No dividend has been declared for the period as Sun International – which also operates in Nigeria and Chile – looks to further reduce its net debt position, which currently stands at R7 billion.
BUSINESS REPORT ONLINE