SkyCity Entertainment Group is expected to move into a stronger cash flow phase after completing its major capital projects. Investment firm Forsyth Barr expects the casino operator to generate more free cash flow in the coming years, creating room for higher dividends and other capital options.
That outlook follows years of heavy spending across SkyCity’s property portfolio. Large projects have included the New Zealand International Convention Centre in Auckland and the expansion of SkyCity Adelaide.
Capex cycle has ended
SkyCity’s recent cash flow has been affected by large development costs. The company generated about NZ$2.5 billion in operating cash flow since FY15, but more than half of that was used on capital-heavy projects.
Those projects are now largely complete. That means SkyCity can shift from building and upgrading assets toward using cash from its existing operations. The company still has normal maintenance spending, but the biggest development phase is no longer expected to absorb the same level of cash. That gives analysts more confidence that free cash flow can improve.
Dividends could return
Forsyth Barr sees a path for SkyCity to lift its free cash flow yield from more than 14% in FY26 toward about 20% in FY28. That would give the company more flexibility after several years of weaker shareholder returns.
Stronger free cash flow could support a double-digit cash dividend yield by FY28. That would depend on trading, asset sales, debt costs and how much cash the company keeps for other uses. SkyCity has already signalled that dividends could resume when trading conditions and free cash flow improve. A stronger cash position would support that target.
Asset sales remain possible
SkyCity has also been looking to sell non-core assets. These include The Grand by SkyCity hotel, an Auckland office property and a carpark concession.
Selling those assets could reduce debt and lower interest costs. It could also cut future capital spending needs, helping free cash flow improve further. The strategy would leave SkyCity more focused on its main casino and entertainment assets. Its operating portfolio includes Auckland, Adelaide, Queenstown and Christchurch.
Trading conditions remain important
The cash flow outlook depends partly on how SkyCity performs in its core markets. The company cut its FY26 earnings guidance in May, citing weaker trading and uncertainty across its operations. SkyCity now expects FY26 underlying EBITDA of NZ$180 million to NZ$190 million. That means cash flow may improve after capex ends, but earnings momentum will still depend on customer activity, cost control and regulatory conditions.
