Sun International, the hospitality and gaming giant, has seen a 5.1% increase in profit, reaching R12.6bn, thanks to a surge in income from its online betting platform, Sunbet.
The growth comes despite ongoing economic uncertainty, highlighting the defensive nature of gambling businesses.
The rise in active players was a major factor behind Sunbet’s performance, boosted by marketing efforts, the introduction of new games and continuous enhancements to the overall player experience, the group said in its results for the year to end-December.
Sunbet’s growth surpassed expectations, exceeding the five-year goals set in its 2022 plan. The platform’s income grew 60.6%, reaching R1.2bn for the year, which resulted in record adjusted earnings before interest, tax, depreciation and amortisation (ebitda) of R363m (up from R221m previously), before management fees.
Profit from the group’s four largest urban casinos grew 0.7% — Sun City, Carnival City, GrandWest and Time Square — while smaller regional casinos faced challenges.
Revenue from rooms and food and beverage sales at the resorts and hotels saw solid growth, rising 10.9%. However, income from Sun Slots, which runs a network of slot machines across various locations, dropped 3.1% to R1.4bn compared to the previous year. In response to the decline, Sun International said management had rolled out several initiatives to address the issue.
Sun International’s adjusted headline earnings rose 13% to R1.3bn, resulting in adjusted headline earnings per share (HEPS) of 531c, a 13.5% increase compared to the previous year.
The board maintained a 75% dividend payout ratio and declared a final gross cash dividend of 237c per share, totalling R612m. That brought the total dividend for 2024 to 398c per share, or R1.028bn, with a dividend yield of 10.2%.
The group’s debt to adjusted ebitda stands at 1.5x, within the bank covenant of three times or lower.
It said that aligned with Sun International’s dividend strategy, which aims to provide sustainable payouts to shareholders while keeping the debt to adjusted ebitda ratio below two times.
The group said the gaming industry was undergoing dynamic changes, and through its omnichannel strategy, Sun International would continue to leverage its strong brand and market presence to both retain and expand its customer base.
“Our balance sheet remains robust, providing us with the financial flexibility to invest and to continue paying dividends at our targeted payout ratio. Through strategic planning, efficient capital allocation, cost management, and a focus on operational excellence, Sun International will sustain its growth trajectory and deliver stakeholder value,” it said.
Despite the uncertain macro environment, the group said it expected lower inflation and interest rates to improve conditions in the medium to long term.
“The year-to-date trading shows strong growth in Sunbet, increased income from resorts and hotels, and low single-digit growth in urban casinos and Sun Slots,” the group said.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.