SkyCity cuts FY24 profit outlook amid economic challenges

New Zealand-based gambling firm SkyCity Entertainment Group has slashed its annual profit forecast and suspended dividends until fiscal 2026, citing challenging economic conditions and rising costs. This announcement on Thursday led to a nearly 17% drop in the company's shares.

The company reduced its net profit after tax forecast for the 2024 financial year to between NZ$120 million ($74.28 million) and NZ$125 million, down from an earlier estimate of NZ$125 million to NZ$135 million. 

It also cut its EBITDA forecast to between NZ$280 million and NZ$285 million for the 12 months to June 30, from the previous range of NZ$290 million to NZ$310 million.

SkyCity cited several factors for the reduced guidance, including ongoing economic challenges affecting consumer spending, delays in project completions, and potential increases in casino duty expenses in Adelaide. The opening of the Horizon Hotel in Auckland has been postponed to August from the originally scheduled March.

The company also faces regulatory probes and fines in New Zealand and Australia. SkyCity will pay a penalty of A$67 million ($45 million) in July to settle anti-money laundering proceedings in Australia. Additionally, SkyCity reached a settlement with New Zealand's Department of Internal Affairs over breaches of anti-money laundering obligations, proposing a penalty of NZ$4.16 million.

The company has suspended dividends for the second half of this year and the entirety of next year. For fiscal 2025, SkyCity projects EBITDA between NZ$250 million and NZ$270 million, considering the impact of various one-off costs. The outlook does not account for a potential suspension of its casino license in New Zealand.

SkyCity recently appointed Jason Walbridge as its new CEO, effective July, following the departure of Michael Ahearne. Julie Amey will step down as CFO in September, and Andrew McPherson has been named chief information officer.

SkyCity plans to publish its full-year 2024 results on August 24.