Like most casino groups around the world, Sun International has faced severe losses during the pandemic. However, from the Sun International revenue index from the last months to end in June 2021, it appears that they are recovering.
Also, to show investors an improvement in their income, the hotel and gaming group compared their present revenue with the same period in 2019. Based on the Sun International results for 2021, there is an improvement.
However, whether the improvement is enough to convenience investors remains the challenge.
The Sun International Income Statement of 2021
From the Sun International 6 months income statement review, it seems that their revenue is going back to gradually going back to “normal”. According to the gaming and hotel group management, their revenue increased by approximately 62 percent to R4 billion from January to June 2021.
Meanwhile, in 2021, despite the series of lockdowns, Sun International’s revenue was estimated at R2.48 billion for the entire year.
The Sun International income improved in the last six months, but it is still lower compared to 2019. In the same period in 2019, the Sun International revenue was R5.5 billion.
Furthermore, Sun International also disclosed that gamblers who tried their luck at their slots and table games also increased tremendously. Also, they added that their net gaming wins increased to R3.2 billion in the six months under review as opposed to 2020, when they generated R1.9 billion within the same time.
However, the Sun International income statement for the last six months from January to June 2021 showed a loss of R59 million. Nevertheless, this is much lower than a whopping R1.4 billion loss recorded during the pandemic’s heat in 2020.
How Did the Sun International Weather the Storm to Remain in Afloat?
According to sources, Sun International struck a deal with its lenders for an easier borrowing term. Sun International struck deals with Stand Bank, Absa Group, and Nedbank to help them stave off any prospect of default. Also, industry watchers believe that this is a sign that banks are interested in supporting the hospitality sector to strive.
As of March 31, 2021, the Sun International debt was R7.67 billion ($538 million). When Abas Group was contacted, they emailed that they would remain supportive of Sun International without giving any details. More so, Abas Group sent their response via email. However, Standard Bank and Nedbank declined to make any statement.
The Sun International new deal with lenders majorly covered terms of payment. However, the terms and conditions Sun International agreed with its lenders regarding payments were not made public. As of June 2020, the gaming and hotel groups’ debt was R11 billion.
Steps Taken by the Sun International to Improve Income
Considering the losses Sun International recorded in the past year, steps had to be taken to reduce the cost of running their business. For instance, the management of Sun International sought ways to improve their online gaming platform called SunBet. Since their land-based casino gaming suffered huge losses, the company upgraded their SunBet online gaming platform. Also, SunBet, according to the Sun management, recorded more deposits too.
The insurance claims were also reinvested into their businesses to boost operation. However, their insurance claim was more than their maximum insured loss in five of their operating units. The group got a claim worth R235 million, and it will be received in August. Also, Sun International will receive a claim of R260 million in the next coming months.
The Pandemic and South African Land-based Casino Industry
Across Africa, South Africa was among the countries that were most affected by COVID-19. Somehow, that affected their hospitality business to a very large extent. It’s no longer news that the land-based casinos were shouted at several times. Meanwhile, the National Gambling Board is relieved with the relaxation of restrictions. Besides, the third wave of the virus also added more salt to the injury.
However, to curb these losses, legalizing online casinos in SA will go a long way to boost revenue. Right now, thousands of online casinos are operating in SA from offshore. If the online casino industry in SA is regulated, the government and casino operators will generate more income.
Will the Sun International Recover from Its Losses?
According to Anthony Leeming, the chief executive of Sun International, the group would bounce back. Besides, Anthony also noted that their core casino business has also improved significantly.
Finally, with the SA government increasingly catching up with vaccinating the citizens, there is hope that the hospitality industry will bounce back. Sun International is one of the biggest casino operators in SA. More so, there is hope they would get back to speed in their business with restrictions being eased. To crown it all, as a major player, Sun International can also push for the legalization of online casinos.