Profits Warnings Issued by SkyCity in FY25 Due to Worsening Market Situation
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SkyCity Entertainment Group Ponders a Tough Year Ahead
It seems SkyCity Entertainment Group might not hit its full-year targets in 2025, thanks to some rocky market conditions. Last Tuesday, the group gave a trading update, hinting that EBITDA for the year could plunge roughly 4% below the lower end of its restated guidance range. That's between NZ$225 million and $245 million, for those keeping track.
Back in February when they released the H1 data, SkyCity already grappled with declines in revenue, EBITDA, and net profit during the first half of their financial year. Now, with the market conditions worsening in the second half, SkyCity is bracing for continued drops in consumer spending.
The Struggle with Spending and Predictability
While visitor numbers have remained steady across all precincts, there's been a significant decline in the average amount spent per visit. This reduction has hit the group's Adelaide property particularly hard, affecting both hospitality and gaming sectors, notably at SkyCity Auckland. However, casinos in Hamilton and Queenstown have performed relatively in line with expectations.
Notably, Adelaide's performance has taken a hit due to lower visitation and spending by VIP customers. This decrease is partly due to SkyCity stepping up its anti-money laundering (AML) and gambling harm minimization programs.
On a brighter note, electronic gaming machine terminal turnover in South Australia has increased year-on-year, with SkyCity's uplift program at the Adelaide property contributing to this growth. The total spend on the initiative is set to reach $60 million from FY25 to FY27.
Sticky Market Conditions Causing a Headache
In the update, CEO Jason Walbridge acknowledged the tough market conditions that have continued to impact SkyCity. "These difficult market conditions, which affect businesses reliant on discretionary consumer spending, are causing significant problems for our revenue and earnings," he said.
While visitation across SkyCity properties has been steady, the challenging financial conditions linger. Walbridge shared that SkyCity is making adjustments to its underlying cost base to respond to the lower revenue levels they're currently experiencing.
Despite the trend, Walbridge keeps a sunny outlook for the long term, pointing to next year's scheduled opening of the New Zealand International Convention Centre (NZICC) as a significant milestone. "Even with these challenging conditions, we're positive about the future, particularly with the NZICC opening in February 2026," he added.
SkyCity's Digital Future
As for SkyCity's online gambling ambitions, though not mentioned by Walbridge in the update, the group has been prepping for the launch of a regulated online casino in New Zealand due in 2026. They're currently working with the government to develop regulations for the market. Cabinet documents from September 2024 reveal that SkyCity was one of a handful of grey-market operators showing interest in applying for an iGaming license, along with Tab NZ, Grand Casino Dunedin, Class 4 societies, 888, Bet365, SpinBet, Spin City, Super Group, and Betway.
There ya have it, mate. A refreshed take on SkyCity's tough predictions for 2025, their struggles with spending and market conditions, and their hopes for the future. Keep your eye on SkyCity, and we'll be here to keep you posted on their progress. Cheers!
- SkyCity Entertainment Group has expressed concerns about potentially missing its full-year targets in 2025, due to the challenges faced by the industry in the wake of difficult market conditions.
- In 2024, SkyCity Entertainment Group is preparing to take part in developing regulations for a regulated online casino market in New Zealand, with the goal of launching their online services in 2026.
- Currently, SkyCity Entertainment Group's financial year shows a decline in revenue, EBITDA, and net profit, with a forecasted plunge of 4% in EBITDA for 2025, falling below the lower end of the restated guidance range.
- Despite the financial challenges in the business world, many companies in industries reliant on discretionary consumer spending are grappling with such difficulties, and SkyCity Entertainment Group is working to adjust its underlying cost base to respond to the lower revenue levels.
