Sun International Forced to Restructure after Pandemic Slump

Leading South African casino operator Sun International has reported a 56.2% year-on-year drop in revenue for the first half of 2020, after the Covid-19 pandemic forced its properties to close during the first quarter of the year.

As a result, the operator has said that it will try to reshape its business, including a divestment of its Nigerian and Latin American operations and significant job losses in South Africa.

According to the operator, its revenue for the six months to 30 June fell to £165.0 million after all of its land-based operations halted in the middle of March. Its Chilean operations were suspended from March 18 and all major South African properties shut by March 26, with operations in Argentina, Colombia, Panama and Peru following at the end of the month.

The end result was a dramatic drop in revenue in South Africa of 55.2% while Nigerian revenue fell 57.7% and revenue from Latin America was down 58.1%. EBITDA also slumped 96.3% with depreciation and amortisation costs increasing due to the operator’s reorganisation plans.

It is expected that redundancies will hit the firm’s South African venues at Sun City, Maslow Sandton, Boardwalk, The Table Bay and Wild Cost, leading to as many as 2,300 employees losing their jobs.

Naledi Casino and Carousel Casino have both been closed permanently, while Table Bay and Maslow Sandton will not reopen until the operator feels there is sufficient demand.

A similar reorganisation is taking place in Chile, where Sun International holds a 65% share in the Sun Dreams business, a portion of which it is divesting, as it says that the disruption of the pandemic, combined with looming licence renewal fees, have hit the financial viability of its stake. As a result, around 1,000 employees in Chile have been given the option of voluntary redundancy.

Speaking about the restructuring, the Chief Executive of Sun International, Anthony Leeming, said that they had been forced to make some tough decisions due to the pandemic:

“While we anticipate the recovery will take time, we have placed the group on a firm footing for the future, realising operational and cost efficiencies and improving the guest experience that will position the group for growth when the outlook improves.“

That recovery is not likely to be in the short term. Figures show that casino revenue for July 2020 was only 39% of the figure for July last year, while revenue from gaming machines coming in at 49.1% of last year’s figure. There was some good news for the company with a small rise in income for SunBet, which added draw based games to its online offering in July, and which is due to launch live dealer games in the next few weeks. The success of the online casino sector has led the operator to push the South African Department of Trade and Industry to allow land casinos to offer online games.

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