Sun International takes action to close loss-making operations and improve operating performance

Sun International reported year-end earnings, reporting revenue growth of 12 percent and EBITDA growth of 13 percent. The revenue growth was attributed to the inclusion of earnings from Sun Dreams (from June 1, 2016), Sun Slots (from April 1, 2016), and Time Square (from April 1, 2017).

South Africa's intensive cost controls and increased efficiency drove EBITDA from a -9% decline in the first half to 15% growth in the second half of the year, resulting in a 3% increase in EBITDA this year. Sales in South Africa improved from a -1% decline in the second half to 2% growth compared to the first half, leaving sales flat for the year. Shibaya, Suncity, Sunslot and Table Bay delivered satisfactory results with sales and EBITDA growth. While sales in Grandwest were in line with the year before, earnings in Times Square were disappointing, and EBITDA fell 2%.

Latin America's operational performance is largely attributed to a low-growth economy and the tragic shooting in Monticello in July 2017.

The group generated several one-off or abnormal items adjusted for headline and adjusted headline revenue, both of which were down 41% year-over-year.

"We have taken decisive action to address our underperforming operations and focus on both controlling costs and increasing efficiency," said Anthony Leaming, CEO of the group.

"We have made significant investments in both South Africa and Latam over the past few years. Sun City's overhaul and Sun Slot's acquisition met expectations. However, other developments have fallen far short, significantly increasing our debt-to-debt ratio. Economic growth in South Africa and Latam has slowed, political uncertainty has increased, and social challenges, particularly in South Africa, have hit record highs. Together, it created a perfect storm, putting pressure on consumer spending and slowing game revenue growth."

"That said, our business has proven resilient, and we remain cash-generating and positive about future opportunities. In these challenging times, we've changed our focus, re-adjusted our strategy, and we're committed to not only getting the basics right, but also operating at optimal efficiency and exceeding customer expectations."

"We closed our loss-generating operations, including Fish River Sun, Sunna Casino in Colombia, and International VIP Business in South Africa and Panama. We also reduced the size of Ocean Sun Casino by closing the 66-story casino and drastically reducing staff. We have applied to the Eastern Cape Games Board to restructure the boardwalk and are in the process of addressing the performance of the carousel.

The company is looking to launch a capital raising exercise to eliminate the risk on its balance sheet, which aims to repay debts and reduce interest burdens. A stronger balance sheet and capital structure will give management leeway to focus on its business.

Given the need to reduce high debt levels, the board decided not to declare dividends for the year ended December 31, 2017.

Looking ahead to the future, Leaming said, "The mood has definitely improved in South Africa. However, we don't expect this to immediately lead to an increase in discretionary spending or spending on games, but it will have a positive impact in the medium term."

"Closing loss-generating institutions will have a positive impact, as will the interventions we have implemented at Ocean Sun Casino, Boardwalk and Carousel. We are expecting much improved performance from these operations."

"We also expect to see improvements in sales and EBITDA for Times Square following the stadium opening and hotel opening a few months ago. While lands and droughts may hold back some tourists and put pressure on Cape Town's Table Bay, Sun City's major refurbishment will continue to benefit."

"Thanks to recent government changes, Chile's economy is also showing signs of recovery," he said. "Game sales have stabilized, and Monticello has also begun to reflect year-on-year sales growth." The addition of the Peruvian Thunderbird Resort will contribute positively. If the Sundreams successfully achieves a successful result in the bidding process for the city's license, it will have a significant impact.

BY: 릴게임