‘Challenging’ market in H1 sees SkyCity lower full-year guidance

SkyCity Entertainment Group Adjusts Earnings Forecast Amid Challenging Market Conditions

SkyCity Entertainment Group has revised its full-year earnings guidance following a notable decline in revenue, underlying EBITDA, and net profit during its first-half financial results. For the six-month period ending December 31, 2024, the company reported revenue of NZ$422 million (£191.7 million/€231.7 million/US$241.7 million), marking a 4.7% decrease compared to the same timeframe in the previous year, according to the figures released on February 20.

The revenue downturn was widespread, affecting various operating segments, including the company’s online gaming division. Additionally, operations in key markets such as Adelaide and Auckland contributed to modest revenue declines.

In response to these results, CEO Jason Walbridge emphasized that SkyCity is facing “challenging” market conditions, which have resulted in subdued consumer confidence. However, he noted a positive trend in casino visitor numbers, with a total of 5.4 million guests visiting SkyCity properties in the first half, reflecting a 5.9% increase from the prior year.

Looking ahead, SkyCity is strategically positioning itself for the anticipated launch of a regulated online casino in New Zealand in 2026. The company is actively collaborating with government officials to develop regulations that will guide this emerging market. Earlier cabinet documents from September 2024 indicated that SkyCity was among a select group of grey market operators eager to apply for an iGaming license, alongside other significant industry players such as Tab NZ, Grand Casino Dunedin, Christchurch Casino, various Class 4 societies, and major international sportsbooks like 888 and Bet365.

Auckland Revenue Decline Impacts Overall Performance

Analyzing revenue sources, gaming operations accounted for 71% of total sales during the first half, while non-gaming revenue contributed the remaining 29%. Non-gaming revenue streams included food and beverage services (14%), hotel accommodations (8%), and entertainment offerings (7%).

SkyCity’s Auckland operations, which serve as the cornerstone of its revenue stream, reported a decrease in total underlying revenue, falling from $280.6 million to $258.3 million year-on-year. This decline can be partially attributed to softer market conditions, although it was somewhat offset by stronger performances from the Horizon Hotel, increased parking income, and improved contributions from the Sky Tower.

On the Auckland front, SkyCity provided an update regarding the New Zealand International Convention Centre (NZICC), set to open its doors to visitors in February 2026. Walbridge characterized this development as a potential “game changer” for the region, anticipating an influx of approximately 500,000 additional visitor days to SkyCity Auckland. This boost is viewed as significant for both the company and the broader Auckland and New Zealand economies.

In other locations, underlying revenue in Hamilton and Queenstown decreased slightly to $38.3 million, even as visitor numbers in gaming and non-gaming sectors increased. Conversely, Adelaide saw a 5.5% uptick in revenue to $123.2 million, driven by a surge in visitor traffic.

In stark contrast, SkyCity’s online revenue plummeted by 62.5% to $2.1 million. Management attributed this downturn to an inconsistent regulatory environment, alongside increased investments aimed at enhancing online team capabilities as the company strives to expand its digital offerings.

Corporate revenue also saw a dramatic fall, dropping 90.9% to just $100,000.

Overall, SkyCity’s underlying EBITDA for the first half reached $113 million, representing a 22% year-on-year decline.

Revised Full-Year Guidance Reflects Ongoing Market Challenges

In light of the first-half performance, SkyCity has adjusted its full-year earnings expectations downward. The company’s forecast for underlying group EBITDA is now set between $225 million and $245 million, a decrease from previous guidance of $245 million to $265 million.

Walbridge stated that this adjustment is reflective of anticipated ongoing “challenging” economic conditions. Furthermore, the company has confirmed that no dividends are expected for the financial year 2025, highlighting a cautious approach as it navigates the current market environment.