In a trading update, SkyCity announced that the adjusted EBITDA for FY24 is expected to be between NZ$290.0m and NZ$310.0m. This projection is based on the company’s performance in the first five months of the financial year.
SkyCity achieved an adjusted EBITDA of $310.0m in FY23 and had forecasted a modest increase for FY24. However, various factors have led to a reduction in guidance, potentially resulting in a decline in earnings.
One contributing factor is a decrease in revenue from electronic gaming machines (EGMs) across their New Zealand locations. This decline is attributed to ongoing cost-of-living pressures and economic uncertainty, impacting consumer spending.
SkyCity also noted a weaker-than-expected performance at its Adelaide property in Australia. Additionally, the company faces legal and compliance cost pressures and is currently reviewing the cost base for this location.
Furthermore, SkyCity’s earnings were affected by investments made in preparation for the potential regulation of online gambling in New Zealand. Though legislation is still in its early stages, the company views this market as a growth area and remains optimistic about medium-term earnings growth.
Based on the five-month period, SkyCity anticipates its net profit after tax to be between $125.0m and $135.0m. More detailed information will be provided in the FY24 interim results release, scheduled for February.
It is important to note that the aforementioned guidance from SkyCity does not account for the possible suspension of their casino license in New Zealand. In September, the country’s Department of Internal Affairs applied for a 10-day suspension of SkyCity’s casino license, a matter that is still pending a decision.
SkyCity has faced various challenges in 2023, including federal proceedings by Australia’s Transaction Reports and Analysis Centre over anti-money laundering (AML) failures at SkyCity Adelaide. The company also conducted a review of its counter-terrorist financing and AML programs as ordered by the gaming regulator for South Australia.
In light of these circumstances, SkyCity’s CEO, Michael Ahearne, announced his decision to step down from his role in October 2023. Ahearne will leave the company in March 2024 to return to Europe and prioritize spending time with his family. SkyCity has initiated a search for his replacement.
