Sun International reported a 7.4% increase in group income in the first half of the year, driven by the strong performance of its online brand, SunBet. The company's group income reached R6.58 billion ($411.9 million), excluding the Table Bay Hotel, which it operates under a management agreement with IHG.
In this period, Sun International’s adjusted EBITDA, not including the Table Bay Hotel, increased by 2% to R1.59 billion, with the company's revenue growth landing at what it described as the "upper end of expectations."
A significant factor behind this growth was the online sector, where SunBet’s revenue soared 35.5% year-on-year to R1.18 billion. CEO Ulrik Bengtsson pointed out that this growth outstripped the general 19% expansion in the South African online market. SunBet also witnessed a 32.3% rise in active player days and a 17.5% increase in the number of first-time depositors.
The introduction of proprietary in-house technology within the SunBet system played a crucial role, which included launching a new user interface for players in South Africa and Botswana. Bengtsson described the signs of success on this platform as encouraging. He highlighted that while growth is coming primarily from existing customers in slots and casino, there is a push to diversify offerings through sports betting as recent momentum builds.
Although Sun International did not provide an update on SunBet's current share of the online market, the company indicated plans to double it in March.
On the land-based side, Sun International’s casinos reached a growth milestone, recording their first increase in three years. Revenue from these casinos climbed 1.5% to R3.42 billion, with Sun International increasing its market share by 2.3% to 49%. The company attributed this success to strategic investments in product offerings and marketing, noting a 4.4% growth in land-based casino gross gaming revenue. They introduced 876 new slot machines and stadium games during this period.
Bengtsson remarked that the land-based growth reflects the company's effective execution and prudent investment decisions. Yet, despite rising revenue, gross profit from land-based operations dipped by 0.7% to R2 billion due to substantial marketing investments.
Sun International expressed optimism regarding the future, citing evolving trends in land-based gaming towards more digital experiences, which should enhance performance and profitability. Hospitality revenue also grew by 2.8% to R1.29 billion, even after suffering around R20 million in cancellations tied to the war.
Looking ahead, Sun International reported a strong start to the second half of the year, with revenue growth as of August 31 exceeding their guidance of 6% to 8%. However, the company has invested heavily recently, with capital expenditure increasing from R277 million to R492 million. Bengtsson noted that they are undergoing significant capability-building projects and focused marketing efforts to gain market share.
The company is also prioritizing operational efficiency and margin improvements and is moving towards a lower-cost, more centralized operating strategy, taking into account underperforming assets.
As a part of this shift, Sun International has begun a formal consultation process under Section 189A of South Africa’s Labour Relations Act, which pertains to large-scale retrenchments in companies with over 50 employees. They are also collaborating on productivity initiatives within certain head office functions. Sun International has committed to handling these proceedings with fairness and transparency while exploring opportunities to retain and reallocate employees where feasible.
During the first half of the year, they also adopted a new "Casino Lite" model designed to boost profitability at smaller properties. This model aims at optimizing operations, targeting increases in adjusted EBITDA and operating margins for both gaming and hospitality divisions.
