SkyCity posts NZ$33.7m H1 loss as closures continue to hit earnings

SkyCity Entertainment posted a NZ$33.7m ($22.3m/£16.5m/€19.7m) loss in the first half of the financial year as Covid-19 restrictions in Australia and New Zealand continued to limit business.

The group, which owns and operates five casino properties in New Zealand and Australia, generated revenue of $216.8m in the six months to 31 December 2021, which was down 31.4% on the same period in 2020.

During the period, its flagship SkyCity Auckland property was closed for 107 days. The period was also impacted by on-site restrictions with tourism-related business negatively impacted by international border closures.

Gaming revenue totalled $160.0m, which was down 37.0% year-on-year. Almost half of that figure came from its flagship SkyCity Auckland property.

Non-gaming revenue was at $48.0m, compared to $53.8m in 2020. Some $52.5m came from insurance reinstatement recovery related to the 2019 fire at the under-construction New Zealand International Convention Centre.

SkyCity Online Casino brought in $9.3m, which was up 24.0% on the prior period in 2020.

In terms of costs, SkyCity paid out $215.7m to suppliers and employees, of which $123.3m was in wages, which was down on the prior year. During the period, the group received New Zealand Government wage subsidies of $17.2m during the closure of the Auckland and Hamilton sites.

Marketing and communications costs were down to $6.6m, while sponsorships and other community expenses almost halved to $3.8m.

Normalised earnings before interest, tax, depreciation, and amortisation (EBITDA) was down 69.2% to $20.4m.

The group announced a loss for the period of $33.7m, compared to a profit of $77.9m during the same period in 2020.

Michael Ahearne, SkyCity’s chief executive, said “Covid-19 has continued to extensively impact the business and operations at each of SkyCity’s properties in the first half of the financial year.

“Government mandated lockdowns resulted in the closure of SkyCity Auckland for 107 days, SkyCity Hamilton for 65 days, SkyCity Queenstown for 22 days and SkyCity Adelaide for 8 days.

“When permitted to reopen, the properties have operated under significant constraints due to restrictions on mass gatherings and physical distancing requirements and I’m extremely proud of how the SkyCity team has adapted to those challenges.”

He added: “The performance of the SkyCity Online Casino business has been a real highlight for the period, again exceeding expectations with significant growth in revenue, EBITDA, and customer numbers.”

SkyCity Adelaide recently announced that Covid-19 vaccination will be a requirement for entry to all of its venues from this month.

From February 10, all employees and patrons will need to show proof of full vaccination or a medical exemption to enter SkyCity Adelaide. These venues include the South Australia venue’s casino, hotel and bars and restaurants, which already require wearing face masks, physical distancing and QR code check-in.

Author: Raymond Fleming