Sun International, South Africa’s top casino and hotel operator, has disappointed investors with the news that it intends to scrap its dividend. According to Yahoo! Finance, the operator wants to conserve its capital and reduce debt. Sun International released an announcement regarding profit loss this week. Sun International is due to open its R4.2 million Time Square casino in Pretoria next month, and wants to complete the construction in time.
Shares in the gaming group dipped more than 12% when compared to the numbers last year. Yesterday, they fell 1.23% at just over R76.
In a statement put out on Monday, Sun International said that that the group’s main focus in the immediate future would be to reduce debt and “bed down the implementation and integration of recent acquisitions.”
“Taking account of the difficult trading conditions, the need to complete strategic group initiatives, particularly Time Square, and the need to reduce debt, the board decided not to declare a dividend for the period,” read the statement.
A downturned economy has affected Sun International’s portfolio, and the results could be seen in its numbers. The group saw a significant drop of 35% in full year profit, while diluted adjusted headline earnings per share from July 1st to December 2016 dropped to 223c per share (down 344c) compared to the previous year.
Other numbers out of Sun International’s financial report were as follows:
• Casino revenue dropped 2.7%
• Group revenue grew 31% to R7.7 billion (mainly due to the Dreams SA merge and GIP Slots operations).
Referring to Sun International’s core casino operations in the country, the group said that these were negatively affected by a drop in demand for this type of entertainment by local gamblers “due to difficult trading conditions and reduced consumer spend.”
The chief executive of Sun International, Anthony Leeming said that the group expects that gaming revenue in South Africa remain under pressure given the present economic conditions.
However, he said, Sun International does anticipate hotel occupancy to grow for the remainder of the year.
Sun International owns some of South Africa’s leading casino destinations, including Sun City resort and Sibaya Casino. The group is one of two listed casino operators in South Africa. Sun International has been in the news lately with the imminent opening of Time Square, after it successfully achieved a license to operate the new resort in Gauteng.