SkyCity shares plunge after earnings downgrade
Make us a preferred source
Make us a preferred source on Google
More news: Shares in SkyCity tumbled nearly 18% to $1.32 in early trading on the ASX after the casino operator lowered its earnings expectations for FY24 and FY25 and suspended dividends.
The casino operator has been hit by a challenging economic environment and looming penalty payments to regulators.
The company, which operates casinos in Adelaide and Auckland now expects FY24 profit in the range of NZ$120 million ($112 million) to NZ$125 million.
SkyCity cuts guidance and suspend dividends
The news: Casino operator SkyCity Entertainment has lowered its earnings expectations and suspended dividends amid a challenging economic environment and looming penalty payments to regulators.
The numbers: SkyCity now expects full-year profit in the range of NZD120 million ($112 million) to NZD125 million, down from its previous guidance of NZD125 million to NZD135 million.
Earnings are likely to be down to NZD280 million to NZD285 million, compared to the previous estimate of NZD290 million to NZD310 million.
The dual-listed company expects earnings for the next financial year to be lower still, in the range of NZD250 million to NZD270 million.
The context: Skycity attributed the lowered expectations to the ongoing challenging economic environment that has impacted customer spending across all sites.
The group expects the challenges to continue into the next fiscal year, with one-off items including delays to the completion of the Horizon Hotel, pre-opening operational costs for the New Zealand International Convention Centre (NZICC), preparing for online gaming regulation in New Zealand, and the ongoing risk and compliance uplift activities at SkyCity Adelaide set to dampen FY25 outlook.
SkyCity will also suspend dividends for the second half of FY24 and FY25 in order to maintain “a robust level of headroom" following a penalty payment of $67 million in Australia relating to breaches of anti-money laundering laws between 2016 and 2022.
The source: ASX announcement
