Phumelela Gaming and Leisure, South Africa’s largest horse racing group, has lost over 40% of its market value in 2020. However, the group has said that, as long as racing resumes in South Africa by May, it will be able to ride out the effects of the coronavirus. Phumelela warned that if the lockdown continues past that date, it will probably be forced to reduce its work force significantly.
According to the chairman of Phumelela, Moses Tembe, the group remains very confident that it will manage to weather the storm.
“We held a board strategic session in early March and mapped out a turnaround plan,” he told Business Day.
Tembe said that COVID-19 “was a let-down in the sense that we would have started implementing a strategy that would have retained workers while growing the business.”
If the lockdown extends past April, 2020, he said, Phumelela will have no choice but to reduce the number of employees in order to save the company as a whole.
Although the racing group offers online betting options, the chairman said that revenue from this platform was insufficient to offset the loss caused as a direct suspension of South African and global racing events. All Phumelela’s betting shops have also been shuttered as a result of the government’s directives in an effort to flatten the coronavirus infection rate curve.
Temba made a public plea to the government to help the company save jobs. He said that it was “inevitable” that the country’s racing division would see retrenchments across the board.
In the past three years, Phumelela, which is listed on the Johannesburg stock exchange, has seen its share prices drop 95% - and it’s clear that the woes of COVID-19 on the industry and the economy will not help an already problematic issue.
This hasn’t stopped Tembe from looking ahead, however. He said that the company has “put in place plans to build a most formidable betting business division.”
He said that Phumelela’s horse racing division would continue to “battle” unless the government “comes to the party.”