SkyCity Entertainment Group has published an update to its trading guidance for its fiscal year 2024 following significant developments in the first five months of its financial year.
The group noted that it expects normalised EBITDA for FY24 of between AUS $290m and $310m, in comparison to the EBITDA of $310m in FY23 and previously submitted FY24 guidance of “a modest year-on-year increase”.
Key drivers behind SkyCity’s earnings guidance update include electronic gaming machine revenue reductions across New Zealand sites; a “weaker-than-expected performance” for the Adelaide property; delays in termination settlement of the Auckland Car Park Concession agreement; and accelerated online gaming investment ahead of potential New Zealand regulation.
EGM revenue in New Zealand was reduced to reflect “continued cost-of-living pressures and economic uncertainty, which is impacting discretionary consumer spending”.
The group’s Adelaide property is expected to be weaker than first thought due to a “lower revenue outlook with continued legal and compliance cost pressures”. The property’s cost base is being reviewed.
Delays in the settlement of the termination of the Auckland Car Park Concession Agreement with MPF Parking NZ Limited resulted in “lower car park earnings”. Despite the High Court ruling in favour of SkyCity, there is uncertainty surrounding the Auckland car park assets reacquisition given recent actions from Macquarie to delay its resolution.
Lastly, investment was accelerated in New Zealand online operations ahead of potential regulation, to which SkyCity is “optimistic” about medium-term earnings opportunities.
In addition, SkyCity expects a group normalised NPAT of $125m to $135m, taking into account lower financing cost levels following delays with the Auckland car park, offsetting partially the lower earnings of the car park assets.
The group added that the guidance listed doesn’t reflect any potential temporary suspension of its casino operator’s licence in New Zealand, which is currently under review.
Additional details of the key drivers behind SkyCity’s updated guidance within its FY24 interim results in February next year.