The Star's growth dims as the financial year closes in
Written on the 11 June 2019 by Business News Australia
Growth revenue is softening for The Star Entertainment Group (ASX: SGR) due to various challenges faced by the company.
Between 1 January and 8 June 2019 domestic revenue only rose 0.3 per cent year-on-year.
International VIP trends continue to fall as was the case in 1H19, with turnover down 31.1 per cent in 2H19 thus far.
As a result, the company expects earnings in the $550 million to $560 million range for FY19, compared to $568 million in FY18.
The Star says softened growth reflects challenging macro-economic conditions across the group's markets, lower hold rates on tables games in private gaming rooms and the impact of disruption from works at The Star Sydney.
While revenue from pokies was up during the period, revenue from table games was down 0.8 per cent on the prior corresponding period.
The company's cost management initiatives have been brought forward, with a targeted $40-50 million per annum cost savings run rate to be achieved by the end of 1Q2020.
These improvements are expected to allow the consolidation of functions and provide the opportunity to generate material cost savings across non-customer facing functions and areas.
The Star's capital development program continues according to plan, with the Queen's Wharf Brisbane site excavation expected to be complete in July 2019.
On The Gold Coast, construction of the first joint venture tower with The Star's partners Chow Tai Fook and Far East Consortium (the Dorsett Hotel and Star Residences) is underway, with completion on track for FY2020.
Completion for the upgrade and expansion of the Sovereign Resorts at The Star Sydney remains on track for mid 2020.
Business News Australia
Author: Business News Australia