The Star posts $136M loss in FY22 hit by Covid and inflation; company to now focus on expansion plans

Australian gaming giant Star Entertainment Group published Monday its results for the fiscal year 2022, which ended June 30, showing a statutory loss of AUD 199 million ($136.7 million), attributed to the impact of COVID-19 and its related disruptions. However, the company assured that recovery is "underway."

The company continues to count the cost of scrutiny into its Sydney casino and the COVID restrictions. Normalized EBITDA for the full year dropped by 45% to AUD 237 million ($162.8 million). Normalized revenue fell by 1.6% to AUD 1.52 billion ($1.07 billion) compared to the year prior. 

Shows of recovery could be seen in June, with domestic revenue up 11% compared to pre-pandemic levels. Slot revenue was up 28% while non-gaming revenue also saw a 26% rise. However, domestic tables dropped 4%. 

“COVID-19 related disruptions and regulatory reviews have presented significant challenges. I would like to acknowledge the commitment of our 8,000 team members and express my appreciation for their tireless efforts," interim chairman Ben Heap stated.

“The underlying strength of the business has enabled a strong rebound post COVID-related property shutdowns and operating restrictions. The quality of the business also provided an opportunity to attract high-quality senior executives to drive future change and growth," he added.

The company’s properties were at or above pre-covid levels in the June quarter as restrictions receded, the company says, with Gold Coast rising 48% more than in Q4 2019. Sydney is also in line, and Brisbane saw a rise of 13%. 

However, operating expenses for the fiscal year grew by 14% on the year prior, reflecting increased costs due to the tight labor market, the pandemic, inflation, regulatory reviews and increased investment in regulatory and compliance functions in addition to investment in external consulting, reports The Sydney Morning Herald.

The casino operator, which is bracing for the release of a report on its suitability to hold an NSW casino license, is now facing increased competition in Sydney after Crown Barangaroo opened its gaming room in August. 

Even though the company realizes it is too early to gauge the extent of the damage stemming from its rival’s gambling operations in Sydney, Heap said Crown is not a focus, with the company instead set on its own expansion plans, including the opening of its Queen’s Wharf facility in Brisbane. 

He also added that Star’s non-gaming sector presents a “terrific opportunity” for the group, adding that the opening of Queen’s Wharf will double the number of bars, restaurants and hotels to 150.

Incoming CEO Robbie Cooke

The group is in the midst of an executive revamp with incoming chief executive Robbie Cooke preparing to take over operations. On this subject, Heap stated that "Robbie is well placed to lead The Star and restore confidence in the organization."

"He has the expertise and experience to guide the company through its critical Renewal Program, a body of work already underway that will deliver a number of near and medium-term initiatives focussed on governance, culture, training, and risk and compliance systems and technology, particularly with respect to AML/CTF and KYC obligations," he commented.

Philip Crawford, chairperson for ILGA.

The NSW Independent Liquor & Gaming Authority (ILGA) launched the review into The Star, led by Adam Bell, SC, last year following revelations by The Sydney Morning Herald, The Age and 60 Minutes of alleged money laundering, links to organized crime and fraud at the Pyrmont casino.

A similar inquiry in Queensland into whether the Star is fit to run its Brisbane casino commences on Tuesday and is being led by former state Supreme Court judge Robert Gotterson.

See The Star's full FY22 results here.