Sun International Business Update 2022 – South African operations are nearing pre-pandemic results
On Tuesday, 28 June 2022, Sun International released their official business update for 2022, indicating a 34% increase in its revenue for the five months to 31 May 2022, to R4.28 billion from the same period in 2021.
It is said that these latest figures are a sign that the business is edging closer to pre-Covid levels, with South African income in the current period representing approximately 92% of income achieved during the same period in 2019.
“Despite the lower revenues, adjusted EBITDA [Earnings Before Interest, Taxes, Depreciation, and Amortization] and the adjusted EBITDA margin were up on 2019, largely driven by ongoing efforts undertaken by management in 2020 and 2021 to eliminate excess costs and improve efficiencies across the group,” notes the gaming and hotels group.
Sun International resorts and hotels division reported the largest relational recovery, with income rising 62.3% to R977 million, as compared to the 2021 period of R602 million.
Their casino segment has maintained its strength, seeing a 30.6% increase in income to R2.60 billion, from R1.996 billion in the previous period.
The travel, tourism, hospitality, and entertainment industries have suffered significant loss due to the Covid-19 pandemic, with lockdown measures placing restrictions on gatherings, operating hours and the sale of alcohol. In 2019, a 49% slump in group income was reported of R6.1 billion and a headline earnings loss of R409 million.
The group’s cost-saving and debt reduction strategy has however seen positive change, as its debt in South African operations decreased from R6.4 billion at the December 2021 year end, to R5.8 billion in the current period.
“Debt to adjusted EBITDA and interest cover was well within Sun International’s lenders’ covenants and [has] returned to acceptable levels,” says Sun International.
They added, “Our balance sheet remains in a strong position, and we continue to focus on increasing free cashflows and disciplined capital allocation to maximise shareholder value.”
With the group’s South African operations nearing pre-pandemic levels, their growth strategy across all segments were outlined, which it hopes to achieve by the 2026 full financial year.
Its ambitions include plans to refurbish, upgrade, and complete ongoing developments at some of its properties across its segments. One of the projects is to expand the GrandWest (Casino) Hotel in Cape Town, from a 39-key property to 103 keys.
Although recovery in corporate and international travel remains muted, the group says it is seeing a steady recovery in conferencing, domestic leisure, and sports and events-related bookings and footfall.
One of its main strategic priorities for growth, the group is prioritising the phase 3 completion of its Sun Vacation Club development, allocating R850 million to the project over the next three years.
SunBet, the group’s online sports betting and gaming platform, is currently Sun International’s fastest-growing segment, which attracts a younger, tech-savvy customer base in the mid-to-high income bracket. Capitalising on this growth, Sun International ambitiously aims to increase its customer base and grow SunBet’s revenue six-fold by FY2026.
During the five-month period to May 2022, SunBet marked a 40% increase in income to R105 million, from R75 million in the previous comparable period.