Star Entertainment Group has revised its full-year earnings and revenue expectations downward, citing challenging trading conditions and increased remediation costs.
Revised financial projections:
The company now anticipates full-year revenue to range between $1.68 billion and $1.69 billion, with normalized group earnings projected to be in the range of $165 million to $180 million. This adjustment reflects ongoing economic pressures and the financial impact of remediation activities.
According to Capital Brief, for the quarter ending June 30, 2024, Star Entertainment Group expects a 4.3% decline in revenue compared to the previous quarter and a 3.3% decrease year-on-year. The decline is primarily attributed to continued challenges in the premium gaming segment amid broader economic uncertainties.
Revenue from premium gaming rooms is expected to decrease by 16.5% year-on-year for the June quarter, with significant declines observed at Queensland properties. The Star Gold Coast and Treasury Brisbane have reported declines of 22.6% and 18.2% in premium gaming revenues, respectively, while The Star Sydney’s premium gaming revenue is down by 13.2%.
Conversely, main gaming floor revenues at The Star Gold Coast have increased by 10% year-on-year, mitigating some revenue losses, whereas Treasury Brisbane‘s main gaming floor revenue has remained flat, resulting in an overall property-wide gaming revenue decline of 6.9%, as Inside Asian Gaming writes.
At The Star Sydney, main gaming floor revenues have shown a 6.3% year-on-year increase, yet property-wide gaming revenues are expected to decline by 0.9% compared to the fourth quarter of FY23.
Operational challenges and cost management:
Star Entertainment Group continues to face significant operational challenges, including declining revenues and rising operating expenses. Average monthly expenses have escalated from AU$90.3 million in the first half of FY24 to AU$92.5 million in the fourth quarter, primarily due to ongoing remediation and transformation efforts aimed at operational efficiency.
In response to these challenges, Star Entertainment Group is implementing initiatives to expedite cost reduction measures across its operations.
Amidst its financial adjustments, Star Entertainment Group has appointed Neale O’Connell as acting CEO, overseeing operations during the CEO search process. Interim chair Anne Ward has also assumed additional responsibilities to ensure leadership continuity until a permanent CEO is appointed. Both executives will receive increased compensation reflecting their expanded roles.
The company faces regulatory scrutiny, including a second inquiry into its casino operations in New South Wales and regulatory challenges in Queensland. Additionally, Star Entertainment Group is strategically divesting non-core assets to streamline its operations and enhance financial resilience.
The revised financial outlook by Star Entertainment Group, as published in the Star’s official ASX Announcement (PDF) reflects its proactive approach to addressing current market challenges and pursuing sustainable growth strategies. The company aims to navigate complexities in the gaming and entertainment sector while delivering long-term value to its stakeholders by focusing on operational excellence, regulatory compliance, and strategic realignment.
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