Sun City's Valley of the Waves.
Image: Supplied
Sun International, the South African gaming and hospitality group, reported a better-than-expected financial performance for the year ended December 31, driven by significant growth in its online gaming division, Sunbet.
Sun International CEO Anthony Leeming said: “Our omnichannel approach has helped the group navigate the evolving gaming environment and with our significant growth in Sunbet we continue to see growth in our gaming revenue.”
The results, released on Monday, reflect a resilient omnichannel portfolio amid a challenging macroeconomic environment.
Adjusted headline earnings per share (Heps) rose 13.5% to 531 cents, up from the previous year, translating to adjusted headline earnings of R1.3 billion, a 13% increase. The board declared a final gross cash dividend of 237c per share, up 16.7% from 2023, bringing the total dividend for the year to 398c.
Continuing income grew 5.1% to R12.6bn, supported by a 60.6% surge in Sunbet’s income to R1.2bn. Group-wide continuing adjusted Ebitda increased 3.0% to R3.5bn, achieving an adjusted Ebitda margin of 27.9%.
Sun International said debt levels, excluding International Financial Reporting Standards 16 lease liabilities, decreased from R5.7bn in 2023 to R5.2bn, reducing the debt to adjusted Ebitda ratio to 1.5 times.
Sunbet’s performance underpinned the group’s results, with adjusted Ebitda, pre-management fees, reaching R363 million, up from R221m in 2023. Income soared 60.6% to R1.2bn, exceeding its five-year targets set in 2022. Active players increased 35%, first-time depositors rose 47.2%, and deposits climbed 63.3%. The division expanded with new licences in Mpumalanga, North West, and Botswana, alongside product enhancements like Aviator, new slot games from operators also featured in its land-based casinos, and an improved horse racing offering.
A revamped website with a modern e-commerce design and a marketing campaign tied to Sun City further supported its brand relaunch, positioning Sunbet as a leader in southern Africa’s online gaming market, the group said.
Sun International CEO Anthony Leeming.
Image: Supplied
Meanwhile, urban casinos showed resilience, with income from the group’s four largest properties up 0.7% and an adjusted Ebitda margin, pre-management fees, of 33.7%. Regional casinos faced headwinds from a weak economy, impacting margins.
Sun Slots, targeting a distinct demographic, generated income of R1.4bn, down 3.1% from 2023, but improved its adjusted Ebitda margin to 24.1% from 24%, yielding R342m in adjusted Ebitda.
Sun International noted, "One of the key factors impacting the industry, has been the licensing of online slots in mid-2022 which has negatively affected the LPM [Limited Payout Machines] share of the national gaming market."
Resorts and hotels income rose 7.6% to R3.3 billion, driven by a 10.9% increase in rooms and food and beverage revenue. Adjusted Ebitda, pre-management fees, for this segment grew 11.8% to R788m, with a margin of 24.2%, up from 23.3% in 2023.
The group said, "The resorts and hotels sector in South Africa has experienced a strong recovery, driven by robust domestic leisure demand, conferencing and a resurgence in international tourism. The booming local tourism market has played a pivotal role in this recovery while South Africa’s favourable currency exchange rates and attractions have made it a highly sought-after destination for foreign visitors."
Sun International said the proposed R7.3 billion acquisition of Peermont Holdings Proprietary, approved by shareholders on March 4, 2024, hit a regulatory snag. On October 25, 2024, the Competition Commission recommended prohibition to the Competition Tribunal, citing risks to competition in South Africa’s casino market, particularly in central Gauteng. A hearing is scheduled for May 19–30, with Sun International preparing to defend the transaction.
Looking ahead, Sun International said the gaming industry is experiencing dynamic changes and Sun International, through its omnichannel strategy, will continue leveraging its strong brand and market presence to retain and expand its customer base.
"Our balance sheet remains robust, providing us with the financial flexibility to invest and to continue paying dividends at our targeted payout ratio. Through strategic planning, efficient capital allocation, cost management, and a focus on operational excellence, Sun International will sustain its growth trajectory and deliver stakeholder value.
"Despite the uncertain macro environment, we expect the lower inflation and interest rates to create a more favourable operating environment in the medium to long term. Year to date trading has followed a similar trend to prior periods with extremely strong growth in our onlinebusiness Sunbet, increased resorts and hotels income and urban casinos and Sun Slots achieving low single digit growth," it added.
Regulatory developments also loom, with the Department of Health advancing the Tobacco Bill post the May 2024 elections, potentially affecting the gaming sector.
By 9.45am on Monday Sun International's share price was up 1.43% at R39.63 on the JSE.
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