Sun International debt levels "down nicely' - CEO | Fin24
 
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Sun International debt levels "down nicely' - CEO

Sep 02 2019 21:04
Carin Smith

Sun International CEO Anthony Leeming is satisfied that the group's debt levels are "down nicely at a comfortable level".

He told Fin24 on Monday that, despite the debt levels being higher than he would like them to be, the hotel and casino group is on the right footing.

Sun International released its half year results to the end of June 2019 on Monday. The group reported income growth of 7%. Adjusted headline earnings increased from R115m to R172m, with adjusted diluted headline earnings per share up by 30% to 136c compared to the prior period.

Profit after tax increased 5% to R364m. Headline earnings per share was up 4% to 128c and diluted headline earnings per share was up 30% to 136c. No dividend was declared for the period.

Income from its South African operations specifically was up 2% to R5.5bn.

Leeming told Fin24 that a big highlight in the SA operations was the TimeSquare Casino in Tshwane, which saw a 15% increase in income.

During the period, the group concluded agreements that would see it increasing its stake in the Sibaya casino in Durban by 22.4% to 87.2%. The transaction is valued at R540m. According to Leeming, the casino has done well and a lot of focus is being put on top-end customers.  

Sun City, on the other hand, felt the impact of the pressure on consumers and on corporate travel. Sun City saw a -6% decline in income.  

The Sun Slots business also continued good growth, despite the constrained economic situation. Sun International plans to buy Grand Parade's 30% stake in Sun Slots, making it a wholly-owned subsidiary.

Sun Slots operates pay-out machine gaming licences across South Africa. The transaction is valued at R504m. Leeming thinks Sun International bought the additional stake at a good price.

Furthermore, Leeming is encouraged by the growth in the online business of the group.

As for operations outside of SA, Leeming said operations in Chili are under pressure. Despite having gained more market share, the consumer industry there did not have a great year. At the same time, a labour dispute has been resolved.

Asked whether Sun International would consider getting out of Latin America, Leeming said the group is not considering taking such a step. "But never say never - if the price is right..." he added.

One of the overall strategies followed by the group in SA and abroad was to see where efficiencies could be improved by in order to operate smarter.

Going forward Leeming said the group does not expect any improvement in trading conditions in the short term, given an "uncertain" international environment, a local economy that's under pressure and low business confidence.

"In SA we will look at opportunities if they come our way. We will also look at how to further grow Sun Slots and our online sports betting business," he concluded.

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