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Johannesburg - Sun International [JSE:SUI] increase revenue by 5.4% to R10.8bn, despite anti-smoking laws in Chile and bleak economic growth in South Africa, CEO Graeme Stephens told Fin24.
The hotel group reported on Tuesday an increase in earnings before interest, taxes, depreciation, and amortization (Ebitda) of 4.5% for its full year results ending June 30 2014.
Revenue in the second half was up 7.4% from 3.6% in the first half with Ebitda growth of 16% achieved in the second half offsetting the 5% decline in the first.
The Ebitda margin for the year was marginally below last year at 28.4% (second half 28.9%).
Adjusted headline earnings of R683m and diluted adjusted headline earnings per share of 655 cents were 6% and 7% below last year, respectively.
A dividend of 155 cents (2013:155 cents) was declared, bringing the total dividend for the 2014 financial year to 245 cents (2013: 265 cents).
"We've had a very busy year", said Stephens, adding it has been “a year of two halves”.
"In the first half of the year, we have found ourselves in a bit of a perfect storm. Our big operation in Chile, which had been growing rapidly every year, was hit by anti-smoking legislation impact, which was significant."
He said there is a massive correlation between gambling and smoking and as a result the group lost a significant proportion of revenue and Ebitda.
“Without the growth coming from Chile, we were left looking at the South African market, which has been very subdued. If you look at the economic growth in the country, it is below 2% right now. Our operations here are relatively mature so we rely on economic growth and that just wasn't coming through,” said Stephens.
The first half of the year was very disappointing but the group took corrective action, he said adding that the impact of that is starting to come through.
Watch: Sun International lifts revenue to R10.8bn
"We have seen growth in the South African operations and that is growth that we have created ourselves by taking measures to increase revenue and to cut costs.
"We have actually seen a recovery now in our Chilean operation, which I am delighted to report on. Chile is almost back to normal.”
He said that the group’s improved results for the second half of the year can be attributed to a combination of revenue growth and cost cutting measures.
"We've finished the year off with that strong second half.”
Stephens commented that he believed the group was well positioned for the year ahead and has several projects in the pipeline for South Africa and abroad.
Part of these includes lifting its stake in Monticello in Chile to 99%. Monticello Casino, one of Latin America’s best casinos, suffered a heavy revenue drop because of a smoking ban implemented in Chile in March last year.
"It has recovered from a smoking ban and we took a decision to increase our shareholding there,” said Stephens.
"We have an effective 44% interest, we are taking it up to 99% ... we see that as a corner stone to create a much wider platform in Latin America,” he concluded.
Stephens commented that he believed the group was well positioned for the year ahead and has several projects in the pipeline for South Africa and abroad.
Watch: Sun International eyes full control of Monticello
Part of these includes lifting its stake in Monticello in Chile to 99%. Monticello Casino, one of Latin America’s best casinos, suffered a heavy revenue drop because of a smoking ban implemented in Chile in March last year.
"It has recovered from a smoking ban and we took a decision to increase our shareholding there,” said Stephens.
"We have an effective 44% interest, we are taking it up to 99% ... we see that as a corner stone to create a much wider platform in Latin America,” he concluded.
- Fin24
