Sun International Reports R1.1 B Loss in 2020

It’s no secret that the pandemic significantly affected practically every industry in South Africa – and even more so the casino and hospitality industries. It was expected that casino groups such as Tsogo Sun and Sun International would report on losses and analysts have been waiting for them to publish their official 2020 financial numbers.

Sun International’s official report showed that its adjusted heading earnings came down from R763 million to a loss of R1.1 billion. Adjusted headline loss per share was 633c.

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Key points from the Sun International 2020 Report

• Income from continuing operations dropped by 49% (R11.8 billion to R6.1 billion)
• Continuing adjusted EBITDA reduced by 72% by R3.2 billion to R897 billion.
• From January to June, 2020, income from the South African market declined by 55% to R2.5 billion year on year.
• In the same period, adjusted EBITDA was down 95% to R80 million.
• Most operations began trading again on July 1st, 2020 and, as a result, income and adjusted EBITDA began a slow by steady upward climb throughout the last six months of the year. This continued until the level 3 lockdown which took effect in December, 2020.
• Due to an 8 pm curfew and a ban on alcohol sales from the middle of December, there was a drop in activity at South African casinos and this was seen in the drop of numbers as well.
• Sun International incurred impairment charges worth R1.3 billion: Sun International of R900 million, Boardwalk Casino of R180 million, The Maslow Sandton of R96 million, intangible assets of R72 million and individual assets of R9 million.
• There was a slump to R4 billion in casino income – a 50% drop year on year.
• Since the lifting of the lockdown, Sun International’s casino market share in the competitive and Gauteng markets increased to 28.4% and 39.4% respectively.

 

How Did The Hotel Industry Do?

Sun International runs several very popular and successful hotel properties across South Africa; however the pandemic severely impacted its revenues. As per the 2020 report:

“While the hotel industry has re-opened for domestic leisure and business travel, trading levels remain severely muted. International travel for business and leisure purposes resumed on 1 October 2020 albeit with strict restrictions in place.”

“The easing of lockdown restrictions to level 1 increased domestic leisure travel demand into our resort destinations such as Sun City and the Wild Coast Sun. The Sun Vacation Club at Sun City performed well under these trading conditions achieving occupancies of 79%.”

• Sun International, Sun City’s flagship property, reopened on September 2nd, 2020.
• The Maslow Sandton reopened on October 1st, 2020.
• The Table Bay Hotel in Cape Town reopened in November, 2020

 

How Did The Pandemic Affect Sun International Employees?

The casino and hospitality industries were forced to cut jobsand Sun International retrenched just over 2,000 employees across the group last year.

“The closure of our operations gave us the chance to undertake an in-depth review of our processes, operating structures, systems and guest offering and experience. This review resulted in the identification of costs savings in outsource and service provider contracts, IT systems and other general costs of over R250 million in South Africa,” Sun International said.