The company has reported a 56.2% year-on-year decline in revenue for the first half of the year, after novel coronavirus forced its properties to close midway through the first quarter of 2020. Revenue for the six months to 30 June fell to US$221.6m, after its land-based operations ground to a halt from mid-March.
The operator’s Chilean operations were suspended from 18 March, with its core South African properties all closed by 26 March. Operations in Argentina, Colombia, Panama and Peru then shut down by the end of that month. This resulted in South African revenue dropping 55.2%, with LatAm’s contribution falling 58.1%.
After operating costs, earnings before interest, tax, depreciation and amortisation (EBITDA) plummeted 96.3% to US$4.7m. The significant hike in depreciation and amortisation came amid plans to significantly restructure Sun International’s operations, with the operator launching a Section 189A retrenchment exercise, or redundancy process.
This will impact its Sun City, Maslow Sandton, Boardwalk, The Table Bay and Wild Cost properties in South Africa, and may see up to 2,300 employees lose their Jobs.
A similar process is underway in Chile, where Sun International holds a 65% stake in the Sun Dreams business. It is in the process of divesting that stake, with local operator Pacifico Sur acquiring a 14.94% stake in the business, and will increase Sun International’s remaining 50% holding, subject to regulatory approval.
The operator explained that the disruption and financial hit caused by COVID-19, especially with upcoming licence renewals, meant it was no longer viable to retain its stake. As a result, 1,000 employees in Chile have been offered voluntary redundancy, with 451 staff taking up the option to date.
“The pandemic has hit the gaming and hospitality sector particularly hard and forced us to make some tough choices to protect the business and to as far as possible limit the impact on employment,” Sun International chief executive Anthony Leeming said.
“While we anticipate the recovery will take time, we have placed the group on a firm footing for the future, realising operational and cost efficiencies and improving the guest experience that will position the group for growth when the outlook improves,” Leeming added.
Source: GMB / iGB