Sun International's group income grew by 7.4% in the first half of the year, totaling R6.58 billion ($411.9 million). This increase was largely attributed to the performance of its online brand, SunBet, which recorded a remarkable year-on-year revenue surge of 35.5% to R1.18 billion. Although the financials exclude the Table Bay Hotel (TBH), which is managed through an agreement with IHG, Sun International's adjusted EBITDA (excluding TBH) rose by 2%, reaching R1.59 billion, with revenue growth falling at the higher end of expected figures.
CEO Ulrik Bengtsson highlighted that SunBet's impressive growth outpaced the overall South African online market, which experienced a 19% increase during the same period. Active player days for SunBet also rose by 32.3%, and first-time depositors climbed by 17.5%. The functionality and appeal of the platform were enhanced through the deployment of proprietary technology, which included the introduction of a new user interface in both South Africa and Botswana. Bengtsson described the outcomes thus far as promising, noting that while existing customers primarily drove growth through slots and casinos, there has also been momentum in their sports segment.
In addition to online achievements, Sun International's land-based casinos segment returned to growth after three years. Revenue from land-based operations rose by 1.5% to R3.42 billion, with the company's market share growing by 2.3% to 49%. This growth stemmed from strategic investments in product offerings and marketing, alongside a 4.4% increase in land-based gaming gross gaming revenue (GGR), bolstered by the rollout of 876 new slot machines and stadium games.
Despite revenue growth from land-based casinos, gross profit experienced a slight decline of 0.7% to R2 billion, primarily due to intensified marketing expenditures. Sun International stated that as land-based gaming transitions towards a more digital and experience-focused model, their investment strategies are expected to yield increased market share, profitability, and improved returns over time.
On the hospitality front, revenue climbed by 2.8% to R1.29 billion, although this figure was affected by approximately R20 million from cancellations linked to war conditions.
As for future operations, Sun International has started its second half of the year with revenue growth surpassing internal guidance estimates of between 6% and 8%. However, significant investments increased capital expenditure from R277 million to R492 million, aiming at substantial upgrades and enhancements within the business. Bengtsson noted that despite ongoing investments, adjusted EBITDA growth has accelerated relative to the first half of 2023.
The company is shifting towards a more efficient and centralized operating model while considering the profitability of less-performing assets. In line with this strategy, Sun International has initiated a formal consultation process under South Africa’s Labour Relations Act, involving potential large-scale retrenchments and performances within certain head office functions.
The company reassured its commitment to transparency throughout this process, voicing intentions to retain and redeploy employees wherever possible. Additionally, Sun International introduced a "Casino Lite" model to enhance profitability at smaller, underperforming properties; focusing on optimizing operations both in gaming and hospitality for improved adjusted EBITDA and operating margins.
