Sun International confident dividends are on their way as business normalises
Casino and gaming group Sun International says it is confident it will be in a position to reward shareholders in 2022, having seen a steady improvement in its operating environment that has brought SA revenue to 92% of precovid-19 levels.
After stringent management efforts to cut costs and improve the experience of both customers and staff, core profit was in fact slightly ahead of a pre-pandemic base, CEO Anthony Leeming said on Tuesday.
The group had been carving out some market share, for example in the urban casino market, and should the group achieve core profit in line with 2019 levels, there was “no reason” not to resume dividend payments, or pursue share buybacks, Leeming said during a capital markets day presentation.
“The balance sheet really isn’t an issue, debt is not an issue,” he said.
South Africa’s hospitality sector, along with construction, were among the hardest hit by the emergence of Covid-19, and Sun International’s battle with the financial fallout had resulted in its cutting staff, shuttering some operations and tapping shareholders for R1.2bn via a rights offer in August 2020.
That rights issue had almost doubled the number of its shares in issue.
In an update for the five months to end-may, the group said revenue had risen 34.4% to R4.28bn year on year, while income from resorts and hotels had jumped 62.3%, indicating a more normalised trading environment.
Cash generation during the current period remained robust the group said on Tuesday, and as a result SA debt, excluding lease liabilities, had fallen 9.4% from the end of December, to R5.8bn at the end of May.
Sun International sold its 64.94% stake in Latin American operation Sun Dreams to partner Nueva Inversiones Pacifico Sur for $160m (R2.7bn).
The group, which owns Sun City Resort in the North West and the Time Square Casino in Pretoria, had returned to profit in its 2021 year, booking a profit of R117m, from a loss of R819m previously.
In morning trade on Tuesday, Sun International’s shares were up 2.49% to R29.20, valuing the group at R7.7bn on the JSE.