SkyCity Entertainment Group, a flagship gambling and entertainment company based in Auckland, New Zealand, turned its previous temporary loss of $33.7 million into a profit of $22.8 million after its operations bounced back to life following the easing of measures against covid.
Increased tourist arrivals lead to higher income:
The New Zealand-based company publicly announced its net profit after tax for the December 31, 2022, half a year after pandemic measures were eased, sparking a surge in tourists and the eventual return of casinos.
Profit increased 60 percent from $289.8 million in HY22 to $462.6 million in HY23.
In this regard, company officials said: “The latest result was in line with pre-Covid performance levels.”
They emphasized that “more New Zealanders are visiting which is causing a recovery in the tourism sector.”
Commenting on the increase in revenue, Michael Ahearne, Chief Executive Officer of SkyCity, said: “I’m very proud of the SkyCity team, who have worked really hard to deliver exceptional customer service in what has been a challenging operating environment.
“The company had seen a strong recovery across its business operations, following several years where its land-based operations were significantly impacted by Covid.”
Better performance of the company after the return of foreign tourists:
One of the main reasons, in addition to the increase in tourists, for the increase in income is the outstanding results in the company’s domestic gaming, hospitality and tourism businesses after the return of foreign tourists, especially to Auckland.
Over the past week, Forsyth Barr analysts Andy Bowley and Mark Robertson predicted powerful operating momentum in today’s result.
In this regard, they said: “Its 1Q23 trading update highlighted positive early signs in the gaming recovery had been maintained. We expect 2Q23 has been more of the same, aided by a full cruise ship summer season in its key market, Auckland, and a progressive recovery in hospitality earning.”
They also added: “Strong electronic gaming machine performance in Auckland and Hamilton was expected.
“Adelaide’s EBITDA contribution would be suppressed by an increase in costs, particularly in regulatory compliance. We expect SkyCity’s hotels to have benefited from elevated industry yields and for hospitality to provide its first material contribution since Covid.”
The company’s projects continue to progress:
The company’s two latest projects, the NZ International Convention Center and Horizon Hotel, continue to progress, according to company officials.
The hotel is scheduled to be completed next year and the convention center a year later “with strong pipeline of international demand.”
Lawsuit against company’s subsidiary:
However, the company’s subsidiary, SkyCity Adelaide casino, is facing legal action following allegations that ” it allowed dozen of gamblers into its Adelaide casino to launder almost A$4b over six years.”
SkyCity showed its acknowledgement of the charges and said: “It could be subject to a civil penalty which may be material.”
Also, on February 7, the company said: “One Australian regulator has been waiting for another before deciding what action to take against SkyCity Adelaide, which faces A$4 billion in money laundering charges.”
What’s more, Australian media projects that fines of up to $2 billion may be the amount the company will have to pay.
Regarding the investigation on which this lawsuit is based, company officials said: “The investigation started in June 2021 and concluded with the December 7 announcement that charges were being filed.
“Responses to the allegations [are] currently under consideration with expert advisor support. Resolution of Austrac civil proceedings could potentially take one to two years. Adelaide had traded in a robust way, benefiting from market share growth and competitive offerings.”