Star Entertainment forecasts full-year revenue decline amid challenging conditions in Q4

Star Entertainment Group has released its FY24 financial update, revealing a challenging trading environment and a forecasted decline in revenue and EBITDA.

Full-year revenue is projected to be between AU$1.68- 1.69 billion (approximately US$1.1 billion) which, even at the upper end, would represent an 11.1% decrease from the AU$1.90 billion ($1.26 billion) posted in FY23.

The group expects Q4 FY24 revenue to be 4.3% lower than Q3 FY24 and 3.3% below the same period in the previous year.

“Trading conditions have remained challenging since the group’s last update on 12 April 2024. As a result, the group expects group revenue for FY24 to be between $1,675 million and $1,685 million,” the company said in the report. 

"These conditions, coupled with elevated operating expenses as a result of ongoing remediation and transformation activities, as well as increased resourcing in risk and control functions, have resulted in the group expecting its FY24 normalized group EBITDA to be in the range of AU$165-180 million ($110-114 million)."

Revenue from Premium Gaming Rooms (PGRs) has continued to decline, anticipated to drop approximately 16.5% across the group compared to the previous corresponding period. While Main Gaming Floor (MGF) has performed better, with an expected 5.2% increase in revenue, it has not been sufficient to offset the overall decline. Specific property forecasts for Q4 FY24 compared to the previous corresponding period include:

The Star Sydney: PGRs revenue projected to decrease by 13.2%, MGF revenue expected to increase by 6.3%, and total revenue down 0.9% year-on-year.

The Star Gold Coast: PGRs revenue projected to decrease by 22.6%, MGF revenue expected to increase by 10%, and total revenue down 4.9% year-on-year.

Treasury Brisbane: PGRs revenue projected to decrease by 18.2%, MGF revenue expected to remain flat, and total revenue down 6.9% year-on-year.

The group's operating expenses are anticipated to remain elevated, with Q4 FY24 monthly run-rate expenses estimated at $92.5 million ($61.4 million), up from $92.1 million ($61.1 million) in Q3 FY24 and $90.3 million ($60 million) in the first half of FY24. In response, The Star is seeking to expedite initiatives to reduce its operating cost base.

The financial update follows the launch of a second inquiry into misconduct and regulatory breaches by the New South Wales Independent Casino Commission. This has led to significant changes within the company's leadership and increased scrutiny on its operations.

Additionally, Star Entertainment continues to progress with the sale of assets, including the Treasury casino, hotel, and car park, as well as the Festival Car Park in Brisbane. The group is also considering the sale of other non-core assets, with further updates expected during the FY24 results announcement later in the year.