Auckland hotel and casino operator SkyCity Entertainment Group has reported a 42 percent fall in annual profit to $71.5 million, prompting a trading halt and a $240 million equity raising.
Revenue fell 11.1 percent to $825.2 million in the year to June 30, despite customer visits rising 4.6 percent. The company said lower spending per person, due to challenging economic conditions, was to blame.
“Our financial results reflect the difficult operating environment we’ve navigated in FY25,” CEO Jason Walbridge said.
“The delayed economic recovery in New Zealand has led to lower discretionary spend, impacting our business, and that has come through the same time as a period of elevated investment.”
That investment has gone into regulatory systems upgrades, pre-opening costs for the New Zealand International Convention Centre, and preparations for online casino gaming.
SkyCity also owns the Adelaide casino, which last October lost a long-running High Court case over whether customer loyalty points were gaming revenue.
The ruling left the company liable for $12.69 million (NZ$14 million) in duty, plus $24.8 million in interest and $200,000 in legal costs.
In June 2024, it was fined $67 million after the Federal Court found its anti-money laundering and counter-terrorism financing programs failed to meet legal requirements, including “appropriate ongoing customer due diligence.”
The company said underlying net profit after tax would have been $64.7 million without the impact of the Adelaide settlement and costs from its “Building a Better Business” program, which aims to prevent further compliance breaches.
Gaming revenue in Auckland has fallen due to the challenging market conditions and churn in the premium and VIP customer segments.
Some losses were offset by revenue from the Horizon by SkyCity Hotel since last August, and from the complex’s carpark following a buyback of the concession.
However, the company plans to sell the carpark and its Auckland offices in an asset sale worth up to $200 million over the next 18 months, and then lease back the premises.
