Pandemic Plunges South Africa’s Sun International into $75 Million Loss
Posted on: March 23, 2021, 08:15h.
Last updated on: March 23, 2021, 10:15h.
Revenues for Sun International, South Africa’s biggest casino operator, were sliced almost in half last year, as the company slumped to a loss of R1.1 billion – that’s almost US$75 million.
Sun International’s sprawling integrated resorts, such as Sun City, GrandWest, and Boardwalk, were forced to close for more than three months in 2020. Meanwhile, ongoing government restrictions, including travel bans, curbs on the sale of alcohol, and a limit on public gatherings, continue to heap pressure on the country’s gaming and hospitality sector.
The situation has resulted in around 2,300 job losses at Sun International properties in the past 12 months, the company said.
It was hard going for Sun City in 2020, a year in which it lost its founder, the visionary and sometimes controversial casino mogul Sol Kerzner.
South Africa’s Worrying Variant
South Africa is battling a COVID-19 variant that is thought to have the ability to evade some vaccines. At the height of its second wave in mid-January, the country was recording almost 20,000 new cases per day.
Sun International CEO Anthony Leeming said the group had been forced to take key steps to mitigate the impact of the restrictions. Currently, the company employs around 7,000 people. But Leeming said a portion of staff was working reduced hours. These steps, including the layoffs, have led to a 60 percent reduction in payroll costs.
Additionally, Sun closed two properties, the Carousel in South Africa and the Nadeli Sun in Swaziland. It also disposed of its interest in Sun Dreams, a joint venture in Latin America with Chile-based Dreams SA.
“We worked hard to reduce costs, optimize working capital, prioritize capital investment, and negotiate with lenders, service providers, and suppliers for either a waiver, reduction, or deferment of payments. We formulated and implemented plans to achieve operational efficiencies and restructured certain parts of the business,” Leeming said.
“The capital raise as a result of the rights offer and the proceeds from the disposal of Sun Dreams has improved our liquidity position and significantly strengthened the group’s balance sheet,” he continued.
Demand Remains Low
Leeming said he believed these operational initiatives would ensure the group was well-placed to be able to deal with current and future COVID-19 challenges and to “grow into the future.”
But he admitted that right now, international demand was rock bottom and business travel remained low. Instead, the short-term focus would be very much on local leisure and the continued reduction of costs, while trying to stimulate some midweek leisure business.
That meant prices for consumers will remain low. Sun International, meanwhile, will simply have to “sweat it out,” Leeming said.