Sun International, the gaming group with a strong presence in the South African gambling market, released numbers for the year ending June 2014, showing that the group managed to perform as best as possible considering a number of outside factors out of its control.
Sun International put effort into cost efficiencies in the second half the year, which results in a 5% gain in full year earnings (before BITDS) to R3 billion. Sun International reported a growth of revenue to just under R11 billion.
While the market reacted without too much enthusiasm to Sun International's numbers (shares dropped 1% on the Johannesburg Stock Exchange following the publishing of results on Monday), investment analysts gave the group points for its second half initiatives.
"It is clear to us that this new management team is refocusing and reinvigorating the business for the better, and we are likely to see continued operating momentum into 2015 as a result of recently implemented initiatives," noted analyst Dirk van Vlaanderen from Kasigo Asset Management, a South African investment firm.
Referring to continued efforts by management to cut costs, the chief executive officer of Sun International, Graeme Stephens said that the second half results didn't reflect the fruits of the group's efforts in their entirety. He said that the company continued to rigorously restructure the company and the process should be completed by the end of August 2014.
"There are more cost-cutting benefits to come, and we're reasonably sure we will see some upside in the business in financial 2015," said Stephens.
Some of the highlights of Sun International's report were as follows:
Revenue at GrandWest Casino improved to R2 billion, with operating profits coming in at R723 million.
Sibaya Casino in Durban produced operating profit of R318 million from revenue of R1.1 billion.
There was a 6% drop in profit for Carnival City in Gauteng.
Sun City only contributed R38 million to Sun International's overall operating profit, despite it being the group's flagship destination. R179 million was spent on a multi phase refurbishment plan for Sun City, due to cost millions more. Phase one should be completed by November, according to the company. The refurbishment includes a R50 million upgrade of the main casino.
Looking ahead, Sun International plans to place further emphasis on its Latin American market and is expected to open new properties in Columbia, Peru and Uruguay.