Amidst the fluctuating economic landscapes of the past year, Sun International has emerged with a sturdy display of financial resilience, highlighting a robust 7.0% advance in total income for the year ending December 31, 2023, as compared to the preceding year. This growth bears testament to the robustness of the company’s omni-channel portfolio and its steadfast strategy execution, with the group securing an income that exceeded ZAR11.3m observed in the prior year.
Despite the overall upswing, Sun International’s journey through the financial year was not without its trials and complexities. The business saw a diverse range of outcomes across its various segments. One of the most noteworthy successes was the company’s betting arm, SunBet, which delivered a record-breaking performance, alongside the Sun City casino which relished a 14.8% surge in income.
In contrast, a select few of Sun International’s casino properties grappled with downturns, especially in the slots operations, which suffered the brunt of the national grid’s “load shedding” woes—a deliberate shutdown of power in parts of the distribution system to prevent the entire system from failing.
Nonetheless, 2023 was largely triumphant for the group, with December marking the strategic acquisition of Peermont for a formidable ZAR7.30bn. This expansion move, encompassing the prestigious Emperors Palace resort and the online entity PalaceBet, is projected to finalize before the year’s close. This acquisition underscores Sun’s confidence in its business direction, which has consistently cultivated value for its stakeholders.
Anchoring its strength on a synergistic omni-channel approach, Sun International remains committed to augmenting operational efficiencies, aiming to not only safeguard but also to proliferate its income and profit margins. Especially in its limited payout machines operations, Sun International showcases enduring fortitude and anticipates that SunBet, which is rapidly expanding, will maintain the remarkable uptick in income by outperforming its key metrics.
Despite the pressures exerted on its urban casinos by the broader economic climate and persistent power outages, the company anticipates favorable trading levels as 2024 unfurls, largely drawn from the prosperous momentum of SunBet once more.
Newly released financial data divulges that the lion’s share of Sun International’s income for 2023 emanated from gaming activities, ringing in at ZAR9.29bn, a 3.2% increase on the prior year. Slot machines, despite witnessing a slight 2.8% dip to ZAR5.51bn, remained a principal income source. However, tables saw a 5.9% rise to ZAR1.59bn, and the Sun Slots and SunBet brands collectively enjoyed a 1.9% income increment to ZAR2.19bn.
The narrative for non-gaming revenue segments is one of marked escalation, with a jump of 21.7% to ZAR2.81bn. Driving this expansion was the rooms revenue, up 32.6% to ZAR1.13bn, while food and beverage revenue increased by 14.9% to ZAR986m, and other revenue streams experienced a 13.7% swell to ZAR591m.
Individually, the GrandWest casino led the pack with a 3.0% rise in income to ZAR1.88bn, followed closely by Sun City on ZAR1.87bn, then Sun Time Square at ZAR1.51bn. Moreover, the SunBet brand had an extraordinary year, generating a record ZAR733m. Sun Slots also ended the year strong with ZAR1.47bn in income, according to the publicly disclosed figures.
Expenditures rose in several areas, including employee expenses, which surged 7.6% to ZAR2.31bn. Additionally, levies and VAT on casino revenue climbed by 2.6% to ZAR2.20bn. These cost hikes, however, did not impede Sun International’s ability to post a higher operating profit, which increased by 2.5% to ZAR2.50bn for the year. Pre-tax profit, including financial costs, rose remarkably by 29.4% to stand at ZAR1.77bn.
After accounting for taxes, foreign exchange impacts, and fair value adjustments on listed shares, Sun International achieved a comprehensive net profit of ZAR1.30bn for 2023, surging 62.1% from the prior year. The group’s adjusted EBITDA saw a modest 2.4% improvement, summing up to ZAR3.40bn.
Looking ahead, Sun International maintains an optimistic posture with a solid balance sheet and a strategic vision poised to generate industry-leading returns for shareholders. The looming acquisition of Peermont may come to fruition this year, yet is not expected to make a significant dent in the financial landscape for 2024. The company is gearing up for a meticulous integration plan that ensures the united group is primed to sustain earnings and cash flows while maintaining comfortable gearing levels post-acquisition.
With a well-established leadership and a robust market trajectory, Sun International is well-positioned to continue its streak of exceptional outcomes.
