08 Dec

Gambling News

SkyCity cautions that earnings may diminish in FY24.

SkyCity Entertainment Group, based in New Zealand, has cautioned that adjusted EBITDA may decrease in its 2024 financial year, contrary to its earlier expectation of a rise.
Paf 2023
In a trading update, SkyCity said that adjusted EBITDA for FY24 is projected to range between NZ$290.0 million (£141.2 million/€164.6 million/US$177.1 million) to NZ$310.0 million. This is predicated on performance throughout the initial five months of the fiscal year.

SkyCity reported $310.0 million in adjusted EBITDA for FY23 and projected a little improvement for FY24. Nonetheless, various reasons have compelled SkyCity to lower its guidance to a level where earnings may indeed decrease.

This encompasses a decline in electronic gaming machine (EGM) income throughout New Zealand locales. SkyCity attributed this to persistent cost-of-living constraints and economic uncertainties, which are affecting consumer expenditure.

SkyCity noted a subpar performance at its Adelaide site in Australia. The diminished income forecast arises amidst ongoing legal and compliance cost pressures, prompting SkyCity to reassess its cost structure for the location.

The operator stated that it was affected by diminished car park revenues resulting from the conclusion of a prior agreement. 

SkyCity is strategising for internet gaming in New Zealand.
Earnings were additionally impacted by investments made in anticipation of anticipated regulations concerning internet gaming in New Zealand.

Although law is still in its preliminary phase, SkyCity has identified the market as a potential growth sector. The operator expressed optimism over medium-term earnings growth facilitated by regulation for the group.

SkyCity indicated that the net profit after tax for the five-month period is expected to range between $125.0 million and $135.0 million. Additional information will be provided in the FY24 interim results announcement, scheduled for February. 

Apprehensions regarding a potential suspension of New Zealand

In September 2023, New Zealand's Department of Internal Affairs sought to suspend SkyCity's casino licence. SkyCity asserted that the advisory did not accurately represent the ramifications of a prospective suspension in New Zealand. 

In September, the secretary of New Zealand's Department of Internal Affairs requested the suspension of SkyCity's casino licence for an estimated duration of 10 days. This pertained to the subsidiary SkyCity Casino Management Limited, which oversees SkyCity's operator licensing for the SkyCity Auckland, SkyCity Hamilton, and SkyCity Queenstown venues in New Zealand.

A resolution regarding the issue has not yet been attained.

SkyCity has undergone a tumultuous 2023. The operator concluded the previous year with Australia’s Transaction Reports and Analysis Centre initiating federal proceedings against SkyCity. This pertained to deficiencies in anti-money laundering (AML) practices at SkyCity Adelaide.

Michael Ahearne resigned from his position as CEO of SkyCity in October 2023.
In May, SkyCity initiated a review of its counter-terrorist funding and anti-money laundering programs as mandated by Consumer and Business Services, the gaming regulator for South Australia. In August, SkyCity reported a provision of AU$45 million in anticipation of a potential civil penalty from Austrac. 

In October, SkyCity announced that Michael Ahearne will resign from his position as chief executive. 

Ahearne will depart from the firm in March 2024 to return to Europe and devote more time to his family. He has held the position of CEO of SkyCity since November 2020, after previously serving as chief operations officer.

SkyCity has initiated a procedure to identify a successor.