SkyCity posts $235 million profit, up 62 per cent despite impact of Covid-19
Thursday, 3 September 2020
SkyCity has announced a $235.4 million profit after tax, up 62 per cent, despite having to close its casinos because of Covid-19 restrictions.
However, its normalised profit after tax was down 60 per cent to $66m after taking into account the New Zealand International Convention Centre fire impact, Covid-19 related adjustments and the A$150m (NZ$162m) impairment of the SkyCity Adelaide casino licence.
Chief executive Graeme Stephens said SkyCity’s New Zealand business performed stronger than expected when the Covid-19 restrictions lifted earlier in the year, however, he said the outlook remained unpredictable.
“We reasonably expect that, in the short to medium term, weaker economies, lower personal disposable income and changed entertainment habits, as well as longer term travel restrictions, will result in SkyCity being a smaller, domestically focused business,” Stephens said.
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Forsyth Barr analyst David Price said SkyCity had outperformed expectations.
“The market was apprehensive, but SkyCity came out with a way better result than its outlook,” Price said.
“Since Auckland reopened after the lockdown, SkyCity saw a strong increase in its electronic gaming machine business, which had the highest margin.”
The market would remain cautious because there was still uncertainty for businesses operating during the global pandemic, Price said.
Stephens said SkyCity’s international business should recover once travel restrictions were lifted, “but the parts of our business driven by corporate travel and by tourism, such as our hotels and the Sky Tower, will take longer to recover”.
“The past financial year has been incredibly challenging and stressful for the entire SkyCity family. We have had to make some significant, tough decisions to ensure that our business survives and continues to provide a great place to work and precincts enjoyed by thousands of our customers,” he said.
SkyCity announced staff layoffs earlier this year, reducing its workforce by 25 per cent.
In April SkyCity culled 200 jobs because of the closure of its hotels and casinos across New Zealand and Australia due to Covid-19.
Then in May, Stephens announced further layoffs, as SkyCity expected to reduce the workforce by about 700 to operate its “business in a new environment”.
SkyCity had closed its Auckland casino under alert level 3 in August, but continued to operate its hotels and casinos in Queenstown and Hamilton under level 2 restrictions.
Stephens said work on the Auckland projects resumed in late May and the company expected the International Convention Centre to be completed in 2023 and the Horizon Hotel to ready next year.
Shareholders will not be paid a final dividend, but expected to resume dividends for the 2021 financial year.
Stephens’ salary in the year to June 30 was $2.4m, down $1.4m from the previous year.
SkyCity’s share price rose 6 cents or 2.4 per cent to $2.56 after the announcement on Thursday morning.