SkyCity Entertainment Group has revised its guidance for the fiscal year 2024 (FY24) due to challenges in its New Zealand and Australian operations. The company cites lower Electronic Gaming Machine (EGM) revenue, ongoing regulatory pressures in SkyCity Adelaide, delays in settlement agreements, and accelerated investments in online gaming operations as contributing factors.
Financial Overview:
SkyCity anticipates recording normalized EBITDA between NZ$290 million and NZ$310 million for FY24, a decrease from the NZ$310 million reported in FY23. This adjustment is attributed to various factors impacting revenue streams.
Revenue Challenges in New Zealand:
Declining EGM revenue at New Zealand casinos due to cost-of-living pressures and economic uncertainty affecting discretionary consumer spending.
Ongoing review of the cost base for the Adelaide business in response to weaker-than-expected performance and legal and compliance cost pressure.
Settlement Delays and Uncertainties:
Delay in the settlement of the termination of the Auckland Car Park Concession Agreement with MPF Parking NZ Limited (Macquarie), resulting in lower car park earnings.
Ongoing uncertainty surrounding the reacquisition of SkyCity Auckland car park assets due to court action by Macquarie.
Investments in Online Gaming Operations:
Accelerated investment in the Group’s New Zealand online gaming operations ahead of potential regulation in the online gaming market.
Optimism about the medium-term earnings opportunity that potential regulation offers, despite remaining at an early stage.
Profit Outlook and Regulatory Uncertainty:
SkyCity expects Group normalized profit after tax for FY24 to range between NZ$125 million and NZ$135 million.
Acknowledgment of the potential impact of a temporary suspension of SkyCity Casino Management Limited’s casino operator’s license in New Zealand, pending consideration by the Gambling Commission.
Statutory Results and Accounting Processes:
Uncertainty around potential adjustments required in SkyCity’s accounting processes prevents the company from providing a specific update on FY24 statutory results at this time.
SkyCity Entertainment Group faces a challenging FY24, marked by revenue declines, regulatory pressures, and uncertainties surrounding settlement agreements and potential regulatory changes. The company remains cautiously optimistic about the medium-term opportunities presented by potential online gaming market regulations in New Zealand. However, ongoing uncertainties underscore the need for a proactive and strategic approach to navigate the evolving landscape.