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Sun International announces a 5.5% increase in revenue for 2023

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South Africa’s Sun International reported a 5.5% year-on-year rise in income to ZAR12.10bn (PS505.0m/EUR590.4m/$643.3m) in 2023, helped by a record performance by its SunBet sportsbook brand.

The total income in the year to 31 December 2020 was ZAR11.3m, 7.0% more than the ZAR11.3m of the prior year. Sun International stated that the results were a reflection of the “resilience”, and the “disciplined execution” strategy, in its portfolio.

Sun International has mixed results when it comes to the overall business. Although incomes were higher in certain segments, it was not true for all areas. SunBet’s record-breaking performance and the 14.8% increase in revenue from Sun City Casino are notable highlights.

Slots operations were affected by the “load-shedding” in several casino properties.

The group had a successful year, as it expanded its portfolio in December with the purchase of Peermont. This deal includes Emperors Palace Resort and the online betting brand PalaceBet. It is valued at ZAR7.30bn. Sun has said that the deal could close by the end of this year.

Sun stated that the performance was a reflection of the strength of the company’s operating businesses, its resilience in its omnichannel portfolio and its disciplined implementation of strategy. This continues to create shareholder value.

We are committed to maximizing operational efficiency and protecting and growing our revenue and margins.

Sun International 2024: Positive Signs

While the group noted that the pressures of the economy in general and the load-shedding are putting stress on their urban casinos, the trading levels have increased at the beginning of 2024. It also noted SunBet’s success.

“Our limited pay-out machines operations are demonstrating continued resilience,” Sun said. SunBet has achieved significant growth in income and exceeds key performance indicators. The business is expanding rapidly, and this momentum will continue.

We expect that our resorts and hotels will have another great year in 2024. We are experiencing positive income growth and an increase in adjusted EBITDA.

Slots decline offset by growth in sports betting, tables and poker

Gaming was the largest source of revenue in 2023, with ZAR9.29bn. This is an increase of 3.2%.

The main source of revenue was slots, which accounted for ZAR5.51bn. This is 2.8% less than last year. Tables income increased by 5.9%, to ZAR1.59bn. Income from Sun Slots and SunBet also increased 1.9%.

Other revenue, which includes non-gaming activities, increased by 21.7% and reached ZAR2.81bn. Sun reported that rooms revenue increased by 32.6%, to ZAR1.13bn. Food and beverage revenue was also up 14.9% at ZAR986m. Other revenue rose 13.7% to ZAR591m.

GrandWest Casino, with ZAR1.88bn in revenue, was the top individual operation, representing a 3.0% growth. Sun City was next with ZAR1.87bn, followed by Sun Time Square ZAR1.51bn.

SunBet generated a record ZAR733m. Sun Slots also enjoyed a successful year, with ZAR1.47bn of income. However, this is 2.7% less than the total for 2022.

Profits to rise 62.1% by 2023

Sun’s costs increased in several categories. Employee expenses will be the main expense for 2023, at ZAR2.31bn. This is an increase of 7.6% on a year-over-year basis. The casino revenue tax and levies also grew 2.6%, to ZAR2.20bn.

Sun’s operating profit increased by 2.5%, to ZAR2.50bn, for the entire year. After accounting for other finance-related expenses, Sun’s pre-tax profits were 29.4% higher, at ZAR1.77bn.

Sun paid ZAR555m total tax, and accounted for ZAR79m of negative currency conversion and ZAR22m of fair value related to listed shares. This resulted in an overall comprehensive net profit for 2023 of ZAR1,30bn, up by 62.1% over the prior year.

The adjusted EBITDA of the group for this year is 2.4% higher, at ZAR3.40bn.

Sun stated that “our balance sheet is strong, and we are well positioned to deliver industry-leading cash returns to our shareholders.” Sun said that while the acquisition of Peermont is expected to be completed this year, it will not have an impact on 2024’s financial performance.

In the interim, our focus will be on comprehensive integration and integrating the group in a way that delivers earnings and cashflow accretion and comfortable gearing levels immediately after completion.

We are confident that our strategy, which is based on our leadership and current momentum, will continue to produce exceptional results.

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