The Star expects underlying EBITDA of US$134.83m to US$141.74m for H1
Star Sydney revenue is down due to increased competition and stricter rules.
Australia.- The Star Entertainment Group has issued a company filing forecasting underlying EBITDA of AU$195m (US$134.83m) to AU$205m (US$141.74m) for the first fiscal half of 2023. It expects AU$330m (US$228m) to AU$360m (US$248.9m) for the year ending June 30.
The company noted that at the Star Gold Coast, domestic revenue experienced a surge of 30 per cent compared to pre-Covid-19 levels, hitting a record high, while Treasury Brisbane revenue was up 9 per cent when compared to pre-pandemic levels, with exceptional results in slots, main gaming floor tables, and hospitality.
However, Star Sydney saw a decline in domestic revenue of 13.5 per cent compared to pre-Covid-19 levels. As a results, Star’s total revenue was down 1 per cent when compared to 2019 levels.
According to the casino operator, the trading performance of The Star Sydney has been negatively affected by stricter operating restrictions since mid-September as a result of the Adam Bell SC’s inquiry and changes to the NSW Casino Control Act.
This led to a rise in the number of patrons who were prohibited from entering and a decrease in the amount of complimentary services and benefits in private gaming areas, affecting both slot and table games. The Star has also faced more competition since the opening of Crown Sydney in August 2022.
The company also expects remediation costs of AU$35m (US$24.2m) to AU$45m (US$31.1m) for fiscal year 2023, of which about half is expected to continue in the fiscal year 2024. While remediation remains the primary focus, The Star said it plans to implement various operational measures to enhance its trading performance in response to the current business environment.
Although these measures are expected to bring in minimal results in the final quarter of FY23 and are not reflected in the fiscal year 2023 guidance, it’s estimated that they will contribute around AU$40m annually to the group’s performance.
The measures include: replacing contractor staff with full-time employees, enhancing The Star Sydney’s operations, implementing cost-saving and efficiency strategies at The Star Sydney, improving customer experience at The Star Sydney and addressing competition in Sydney through loyalty programmes and pricing strategies.
The Star expects to incur a non-cash impairment charge for its NSW business in the range of AU$400m (US$276.57m) to AU$1.6bn (US$691.43m) in its first half FY23 results due to changes in operations following the Bell Review, modifications to the NSW Casino Control Act, and the possibility of an increase in NSW casino duty rates starting in the next fiscal year.
This range is based on the NSW government’s proposed increase in casino duty rates announced on December 17, 2022. The lower end of the range assumes no changes to the NSW casino duty rates, while the higher end takes into account the proposed increases.
Group CEO and managing director Robbie Cooke said: “We are engaged in constructive discussions with the NSW Government in relation to the proposed casino duty rate changes.
“We are singularly focused on working with our regulators and the NSW Manager and Queensland Special Manager to remediate our businesses, as we seek to return to suitability.
“Our key priority is to regain the trust of our community and demonstrate to our regulators that we are suitable to hold our casino licences. Aligned to that, we continue to support the NSW Premier’s initiatives around cashless gaming and improved harm minimisation across the industry.”
