Sun City owner Sun International managed to boost income and profits in 2023, despite absorbing a 400% increase in its diesel costs to combat load shedding – averaging R5 million a month.<\/p>\n\n\n\n
Sun International recorded a 7% annual increase in income to R12.1 billion for the 12 months ended 31 December 2023, while its adjusted EBITDA was up 3% to R3.4 billion.<\/p>\n\n\n\n
Headline earnings were up a massive 86% to R1.037 billion from R559 million the year before.<\/p>\n\n\n\n
Adjusted headline earnings – discounting once-off and ‘unusual’ items – saw a smaller 4.6% increase to R1.142 billion from R1.092 billion in 2022. Adjusted headline earnings per share were up 5.9% to 468 cents per share (425cps unadjusted, from 226cps in 2022).<\/p>\n\n\n\n
The adjustments to headline earnings in 2023 amount to a net R168 million gain from valuation redemptions, foreign exchange losses, acquisition transaction costs and other considerations.<\/p>\n\n\n\n
Like previous years, the majority (76.8%) of itotal group income came from the gaming market.<\/p>\n\n\n\n
Income from this sector increased 3.3% from the previous year, partly as a result of a third consecutive year of growth in the South African gaming market (sitting at a value of R55.8 billion).<\/p>\n\n\n\n
Contrastingly, casino income dropped by nearly 2% to R1.462 billion, as “Sun Slots’ operations were impacted by load shedding with income slightly behind the prior year,” said the group. <\/p>\n\n\n\n
Its betting division, SunBet, saw a 116.2% annual increase, generating record income for this division, amounting to R729 million for the financial year.<\/p>\n\n\n\n
Resorts and hotel income increased by 17.4%, with the flagship Sun City achieving record profitability and a net positive cash flow contribution to the group.<\/p>\n\n\n\n
Importantly, much of the group’s margins were impacted by load shedding costs, with diesel costs amounting to R60 million – an estimated 400% increase from the previous year<\/strong>. <\/p>\n\n\n\n Adjusted EBITDA margin improved from 27.2% at the 2023 half-year to 28.1% for the full year; however, it would have been better if load shedding expenses like diesel costs were not a factor. <\/p>\n\n\n\n As a result, the group is looking to implement a renewable energy strategy “to protect margins and ensure energy security.”<\/p>\n\n\n\n The group’s South African debt (excluding IFRS 16 lease liabilities) now sits at R5.7 billion, down from R5.9 billion the previous year. <\/p>\n\n\n\n The debt levels take into account the payment of the 2022 final dividend of R632 million and the interim dividend of R388 million.<\/p>\n\n\n\n The board declared a final gross cash dividend of 203 cents per share, bringing total dividends for the year to 351 cents per share.<\/p>\n\n\n\n Outlook <\/strong><\/p>\n\n\n\n The group said it is looking to acquire hospitality and entertainment group Peermont sometime in 2024. However, this is not expected to have a significant impact on the group’s 2024 financial performance.<\/p>\n\n\n\n Overall, Sun International has a notably optimistic outlook for its performance in 2024.<\/p>\n\n\n\n “While the economy and load shedding is placing pressure on our urban casinos, trading levels at the start of 2024 have improved marginally,” said the group.<\/p>\n\n\n\n The group has said that many of its revenue streams are “achieving significant income growth and is exceeding key performance indicators”. <\/p>\n\n\n\n “This strong momentum is expected to continue with another substantial increase this year as the business expands rapidly… and we anticipate another good year from them in 2024.”<\/p>\n\n\n\n
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