Johannesburg - Sun International lifted total revenue for the quarter to September by 3 percent to just over R2.5 billion, the hotel and casino group said yesterday. But the group continued to be hit by a ban on smoking in casinos in South Africa and a new smoking ban in Chile, which caused total revenue from gaming – its most profitable business – to fall by 1 percent to R2bn.
However, a revival in tourism, encouraged by the weakness of the rand, pushed revenue from hotel rooms up by 34 percent to R246m and from food and beverages by 15 percent to R280m.
Inflation pulled down earnings before interest, tax, depreciation and amortisation (Ebitda) by 9 percent to R621m and the Ebitda margin decreased from 27.6 percent to 24.4 percent.
The smoking ban in casinos kept revenue flat in South Africa and a ban that took effect in March in Chile caused turnover at the Monticello casino in that country to fall by 11 percent in rand value and 23 percent in local currency.
But income from gaming and hospitality continued to grow strongly in the group’s African operations, particularly in Namibia, Nigeria and Zambia, where the anti-smoking legislation does not apply.
In South Africa the Cape casinos continued to perform well, a reflection of increased foreign tourism to the province, who are attracted by the entertainment offered in addition to gaming. However, this has largely been offset by weaker results from casinos elsewhere in the country, where revenue fell compared with a year earlier.
Smoking decks were opened at Monticello in September and it was hoped that profit would improve “in the medium term” as a result.
Hotel room occupancy improved from 60 percent to 63.5 percent during the quarter with the average daily rate rising by 9 percent to R1 034.
Directors forecast that the low growth in the economy “means trading in the core business of gaming will remain subdued”. They expect the start of the main tourism season to result in continued strong growth in the hospitality industry.
The SA Commercial, Catering and Allied Workers Union (Saccawu) plans to strike at Sun International operations today, after being granted a strike certificate, which could affect 16 hotels and casinos.
Saccawu’s demands include a 10 percent wage increase, while the company is offering 6.5 percent. The union said after the one-day strike it would assess the company’s response before deciding on further action.
The shares fell 2.44 percent to R101.95 yesterday. – Additional reporting by staff reporter
