Sky City cuts earnings forecast as casino customers spend less

Tuesday, 6 May 2025

Gamblers and other visitors to SkyCity’s Auckland casino, entertainment and hospitality offerings are spending less on their visits, prompting the NZX sharemarket-listed company to cut its earnings forecast.

Since the company ‒ which also has casino and entertainment complexes in Hamilton, Queenstown and Adelaide ‒ gave its full-year earnings guidance in February, it said market conditions had continued to deteriorate.

It now expected its full-year 2025 group pre-tax earnings to fall to about 4% below the bottom of the February guidance range of $225 million to $245m.

It said the number of visits continued hold steady across all its precincts.

But “spend per visit across the Group has continued to fall making forecasting difficult”, it said in an announcement to shareholders on Tuesday.

“We will update the market if there is any material change to this revised guidance.’

Despite the weaker performance in Auckland, SkyCity said its Hamilton and Queenstown casinos had continued to perform “broadly in line” with expectations.

However, in Adelaide visitor numbers had dropped, and so had spending by “VIP” gamblers.

The lower spend was a result of changes made as part of an anti-money laundering and harm minimisation programme undertaken to assuage regulators after SkyCity was found to have failed in some of its legal obligations.

That had cost shareholders dearly in settlements, and resulted in a write-down of its Adelaide casino.

Electronic gaming machine spending in South Australia grew during the past year, SkyCity said.

“We are continuing with the Adelaide … uplift programme as detailed in our previously announced guidance. Spend on this programme will be in the order of $60m over the period [financial year 2025 to financial year 2027],” said chief executive Jason Walbridge.

However, this spending was not a continued cost, he said.

“The difficult market conditions that businesses like ours, which are reliant on discretionary consumer spending, are experiencing continue to have a significant impact on both our revenue and earnings,” he said.

“We continue to be pleased with the levels of visitation we are seeing across our precincts and are adjusting our underlying cost base where appropriate, in response to the lower revenue levels we are currently experiencing,” he said.

“Notwithstanding these challenging conditions, we remain optimistic that as consumer confidence returns and spend begins to lift, SkyCity is well placed to maximise the opportunities in front of us, like the New Zealand International Convention Centre opening in February 2026.”

SkyCity shares have fallen from around $2.30 in May 2023 to around $1.15, and dividends to shareholders are currently suspended.