Sun International, a leading hospitality and gaming company, has reported impressive financial results for 2022. The group experienced significant growth in its gaming businesses, leading to record profits.
One of the key drivers of this success was the performance of Sun City, which saw a resurgence in popularity and contributed to market share gains in urban casinos. Additionally, the company’s efforts to expand its gaming operations and implement cost-cutting initiatives were instrumental in driving profitability.
In addition, adjusted headline earnings showed remarkable improvement, increasing from R110 million to an impressive R1.1 billion, or R439 cents per share, compared to 44 cents per share in the previous year.
The adjusted EBITDA margin also demonstrated positive growth, rising from 28.2% in 2019 to 29.7% in 2022. The group was on track to achieve its target adjusted EBITDA margin of 30%, if not for the net expenses incurred due to load shedding, amounting to R53 million.
Furthermore, urban casinos witnessed substantial growth, a remarkable 41% increase from 2021 to 2022. This translated to an estimated adjusted EBITDA of R2,445 million for the year.
As a result of improved financial performance, Sun International resumed dividend payments. Shareholders received a total cash payout of 329 cents per share for the year, representing 75% of the adjusted headline earnings per share (AHEPS).
“SunBet’s robust growth across all key indicators is one reason we are happy with the success we have achieved with our online approach. Sun Slots, SunBet, and the casino industry all saw a huge increase in gaming revenue of 36%.” Sun International CEO Anthony Leeming stated.
Around 5,000 Limited Payout Machines (LPM) were operational during the assessment period. It indicated that Sun’s slot machines generated organic growth. The firm declared that it would cooperate with authorities to expand the deployment of LPMs to the 6,500 places that have been designated.
Sun Slots, in particular, experienced a revenue increase from R1,242 million to R1,491 million, highlighting its growing popularity among players.
SunBet also showed significant growth, with earnings rising by 135% in the second half of the fiscal year, marking an 86% increase compared to the first half. The games on Sun International’s mobile sports betting and casino platform in South Africa kept expanding.
Furthermore, SunBet’s active player count increased by 50%, while deposits increased by 130%. The group also said it would enter new markets by investing R58 million ($3.2 million) in SunBet Africa Holdings for a 70% stake.
Sun International’s CEO stated: “The organization has licenses to run online casinos and sportsbooks in Ghana, Zambia, and Kenya. Our efforts to introduce the SunBet brand in these regions are just getting started”.
While the year presented challenges due to the Covid-19 Omicron variant, Sun International’s resorts and hotels strongly recovered. Domestic leisure, conferences, and events surpassed 2019 levels, and the international leisure business also experienced a rebound in the second half of the year.
Total revenue from resorts and hotels increased significantly by 65% year-on-year, reaching over R2.5 billion. Adjusted EBITDA for resorts and hotels amounted to R450 million, a notable improvement from the previous year’s loss of R56 million.
Outlook
Looking ahead, Sun International is confident in its financial position and its ability to provide cash returns to investors.
“We expect SunBet to maintain its steady increase in revenue. This will be further assisted by the start of the recently released slots offering. Our omnichannel, Sun International’s hotel and casinos and MVG program, will aid our percentage of the online casino market.” Anthony Leeming said.
The group also stated that resort and hotel operations are doing well and that 2023 would be another successful year.
On the other hand, load shedding has significantly impacted expenses, with fuel charges ranging from R12 to R14 million. The group said it looked at possibilities for an energy plan to reduce the impact of load shedding while obtaining a decent return on capital.
