JULIUS BAUMANN

Transport and Tourism Editor

GAMING and resort group Sun International had an upbeat tone yesterday when it said it saw an improvement in trading conditions and expected to report year on-year revenue growth for the remainder of the financial year.

This is the first time since the onset of the financial crisis in late 2008 that the group issued such a bullish report and comes despite a challenging quarter.

Several of the group’s key resorts are showing signs of recovery, particularly Grandwest, Sun International’s largest property, which saw revenue rise 1% in the nine months to March. This is a reversal of a 6,4% fall to R787m in the six months to December. Boardwalk and Sibaya casinos also posted revenue growth of 7% and 4% respectively.

“Trading conditions have stabilised and together with the anticipated benefits of the 2010 World Cup, growth in comparable revenue is expected for the remainder of the year,” it said in its quarterly update released to the market yesterday.

“Comparable revenues for April 2010 were 2% above April 2009, a slight improvement on the decline experienced for the quarter to March.”

Nevertheless, though the recovery appears to have begun, the group still faces numerous challenges and overall revenue fell 1% to R2bn in the nine-month period and earnings before interest, tax, depreciation and amortisation margins fell 2,3 percentage points to 30,2%.

Sun International’s hotel operation also remained under pressure with room revenue falling 8% due to lower occupancies. Sun City’s revenue fell 4% and average room occupancies fell six percentage points to 68%. The Table Bay achieved occupancy of 62%, down from 76% in the previous comparable period, and revenue was down 14%. The Zambian properties also continued to toil, with occupancies falling further to 45% from 49%. Overall occupancies were six percentage points lower than last year.

During the quarter, Sun International was forced to shut down Monticello casino and hotel in Chile only months after its completion when it was damaged by an earthquake in February. Repairs costing $10m are under way and the development is due to reopen in July this year.

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Source: Business Day