SkyCity earnings warning as market conditions ‘deteriorate’
SkyCity Entertainment Group has recently revised its full-year group EBITDA guidance downward, indicating that it expects performance to fall below previous estimates due to a continued deterioration in market conditions.
In a trading update issued on Tuesday, SkyCity announced that it anticipates a group EBITDA decrease of approximately 4% below the lower threshold of its restated guidance, which ranges from NZ$225 million (US$124 million) to NZ$245 million. This adjustment comes after reporting declines across key financial metrics, including revenue, underlying EBITDA, and net profit, during the first half of the fiscal year.
### Factors Contributing to SkyCity’s Revised Full-Year Targets
SkyCity attributes its missed targets to persistent adverse market conditions. Notably, the average spend per visit at its venues has decreased, complicating revenue forecasts. The Auckland property experienced declines in both hospitality and gaming expenditures. In contrast, casinos located in Hamilton and Queenstown are performing relatively in line with expectations.
The Adelaide facility has faced challenges stemming from reduced visitation and spending by VIP customers, which the company links to heightened measures in its anti-money laundering and gambling harm minimization program. On a positive note, electronic gaming machine terminal turnover in South Australia has demonstrated year-on-year growth. SkyCity is committed to an ongoing uplift program at its Adelaide location, with a total investment of approximately $60 million planned between FY25 and FY27.
### Significance of Current Market Conditions
In the update, CEO Jason Walbridge expressed mixed sentiments regarding performance, acknowledging that while visitation levels at SkyCity properties remain robust, challenging market dynamics continue to exert considerable pressure on the company’s revenue and earnings. He stated, “The difficult market conditions affecting discretionary consumer spending have significantly impacted our financial performance. Nonetheless, we are adapting our underlying cost base in response to the current revenue landscape.”
Looking ahead, Walbridge emphasized a sense of optimism regarding the future, particularly with the anticipated opening of the New Zealand International Convention Centre (NZICC) in February 2026. He believes that as consumer confidence begins to recover, SkyCity will be poised to capitalize on emerging opportunities.
### Exploring Online Gambling Ventures
Another pivotal aspect for SkyCity is its engagement in the online gambling sector. While not explicitly addressed in the trading update, the company is actively preparing to launch a regulated online casino in New Zealand, expected to roll out in 2026. SkyCity is collaborating with the government to shape the regulatory framework necessary for market entry.
Cabinet documents submitted in September 2024 indicate that SkyCity is among several grey market operators expressing interest in acquiring an iGaming license. Other potential contenders mentioned include Tab NZ, Grand Casino Dunedin, Christchurch Casino, various Class 4 societies, as well as well-known international operators like 888, Bet365, SpinBet, Spin City, and Super Group (notably including Betway).
By fostering innovations and embracing regulatory changes in the online gambling space, SkyCity is positioned to navigate current challenges while exploring new revenue streams in an evolving marketplace.
