Sun International, a leading hospitality and gaming group, reported a significant growth in its gambling businesses and resorts in 2022. With a 96% increase in adjusted EBITDA to R3.3 billion, the group achieved market share gains in urban casinos and the revival of Sun City. The company also benefited from alternative gambling ventures and cost-cutting measures.
Adjusted headline earnings rose from R110 million to R1.1 billion, driven by improved adjusted headline earnings. The adjusted EBITDA margin increased from 28.2% to 29.7%, close to the goal of 30% if not for net diesel expenses caused by load shedding.
Urban casinos in South Africa experienced a 41% growth, contributing to an estimated EBITDA adjustment of R2,445 million for the year. Dividend payments have resumed, with a cash payout of 329 cents per share or 75% of AHEPS.
Sun International’s online approach showed promising growth, particularly with the top betting site in South Africa, SunBet, which experienced a 36% increase in revenue. The introduction of more games expanded the company’s wagering and gaming services, resulting in a 135% increase in SunBet’s earnings in the second half of the fiscal year.
Sun Slots demonstrated organic growth with nearly 5,000 Limited Payout Machines (LPMs) in operation. Sun International plans to collaborate with authorities to expand the rollout of LPMs to the allocated 6,500 LPM posts.
SunBet Africa Holdings, where the group invested 70% of $3.2 million, expanded the business into Ghana, Zambia, and Kenya. The company anticipates steady revenue growth in SunBet and foresees long-term growth potential in those regions.
Despite initial challenges due to the Omicron variant, Sun International’s resorts and hotels experienced a solid recovery. Domestic leisure, conferences, and events exceeded 2019 levels, and the international leisure business rebounded in the year’s second half.
Total revenue from resorts and hotels increased by 65% annually to over R2.5 billion, with an adjusted EBITDA of R450 million compared to the previous year’s loss.
The company expects to offer cash returns to investors and maintain revenue growth in SunBet, leveraging its omnichannel offering with premium hotels, a gaming portfolio, and the MVG program. It also explores options to mitigate the impact of load shedding and optimize capital returns.