SkyCity Entertainment Group (SKC) H2 2025 earnings summary

Executive summary

• FY 2025 results were in line with guidance, with visitation up 4.6% to over 10.5 million, but underlying revenue down 5.2% year-over-year due to lower gaming revenue, challenging economic conditions in New Zealand, and lower VIP spend in Adelaide.

• Reported revenue was $825.2 million, down 11.1% year-over-year, while reported EBITDA rose 56.4% to $216.1 million; underlying EBITDA fell 15.9% to $233.7 million, reflecting elevated regulatory and compliance costs.

• Underlying NPAT dropped 42% to $71.5 million, while reported NPAT was $29.2 million, rebounding from a prior-year loss.

• Major investments included the opening of the Horizon Hotel in Auckland, ongoing NZICC development, and significant regulatory and compliance upgrades.

• The rollout of mandatory carded play in New Zealand casinos and the launch of the Show by SkyCity loyalty program were completed, with initial customer response positive.

Financial highlights

• Underlying revenue decreased to $825.2 million from $870.5 million, mainly due to lower gaming revenue and VIP churn in Adelaide.

• FY 2025 reported EBITDA was $216.1 million; underlying EBITDA (excluding $17.6 million in one-off B3 costs) was $233.7 million.

• Net debt increased to $757 million, up $100 million from the prior year, mainly due to regulatory fines, penalty interest payments, and one-off capital requirements.

• EBITDA margin declined to 28.3% from 31.9% year-over-year due to lower gaming revenue and a shift in revenue mix.

• Non-gaming revenue in Auckland increased, driven by the new Horizon Hotel.

Outlook and guidance

• FY 2026 underlying EBITDA is guided at $190–$210 million; reported EBITDA at $170.6–$190.6 million, reflecting ongoing economic weakness, carded play impact, and pre-opening costs for NZICC and online gaming.

• Minimum net cost savings of $10 million targeted for FY 2026 to partially offset carded play impact.

• FY 2027 expected to see recovery, with NZICC and online gaming breaking even and economic improvement anticipated.

• No dividends expected in FY 2026; resumption targeted once trading and cash flows normalize.

• BAU capex for FY 2026 projected at $116 million, including $45 million for NZICC.