New Zealand’s SkyCity Entertainment Group has lowered its guidance for FY24, citing lower EGM revenue at its New Zealand casinos and ongoing regulatory pressures at its Australian operation SkyCity Adelaide.
In a filing following the first five months of trading for FY24, which runs until 30 June 2024, the company said it now anticipates recording normalized EBITDA of between NZ$290 million and NZ$310 million (US$178 million and US$190 million), compared to normalized EBITDA of NZ$310 million reported for FY23 and previous expectations of a “modest increase” for the current year.
The reasons for the change, SkyCity explained, are a reduction in electronic gaming machine revenue across its New Zealand sites, reflecting “continued cost-of-living pressures and economic uncertainty, which is impacting discretionary consumer spending”, as well as a weaker than expected performance in Adelaide with continued legal and compliance cost pressure.
SkyCity “continues to review the cost base for the Adelaide business,” it said.
The company also pointed to a 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, with uncertainty ongoing around the timing of reacquisition of the SkyCity Auckland car park assets given ongoing court action by Macquarie.
Finally, accelerated investment in the Group’s New Zealand online gaming operations ahead of the potential regulation of the online gaming market in New Zealand has impacted the FY24 outlook.
“Whilst potential regulation remains at an early stage, SkyCity is optimistic about the medium-term earnings opportunity this offers the Group,” it said.
SkyCity added that it now expects Group normalized profit after tax for FY24 of between NZ$125 million and NZ$135 million (US$77 million and US$83 million), although this does not reflect the impact of any potential temporary suspension of SkyCity Casino Management Limited’s casino operator’s licence in New Zealand, which is currently being considered by the Gambling Commission.
“Due to the uncertainty around the potential adjustments required as part of SkyCity’s accounting processes, SkyCity is unable to provide an update for FY24 statutory results at this time,” the company said.
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