Sun International closes loss making entities

Sun International, a prominent South African Hotel and Casino Operator, recently reported a 41% decline in full-year profit at the adjusted earnings due to once-off items. The group saw a 12% increase in revenue to 15.6 billion rand, attributable to the inclusion of results from Sun Dreams, Sun Slots, and Time Square. CEO Anthony Leeming discussed the company's plans to address debt levels and improve the performance of underperforming assets in a recent interview with CNBC Africa. One of the key highlights of the interview was Sun International's high debt levels, which Leeming attributed to significant expenditures over the past four years. These investments included the development of Ocean Sun in Panama, the acquisition of Sun Slots, and investments in Sun City and Time Square. To address these debt levels, the company announced plans for a rights issue to raise 1.5 billion rand, aimed at reducing the South African debt ratios and improving financial management. Leeming also mentioned that the company had divested some assets that were not yielding the desired results, such as the closure of the Fish River Sun and Casino in Colombia and downsizing in Panama. Additionally, Sun International is considering further actions regarding certain properties, including the Boardwalk and Carousel, to ensure sustainable business operations and protect investments and jobs. Regarding the performance of Time Square, Leeming acknowledged that the results had been disappointing but emphasized the ongoing development and potential of the property. Despite challenges, such as delays in construction, the company remained optimistic about improving market share and attracting more customers to the property in 2018. Leeming dismissed claims of Times Square being a "monumental disaster" and reiterated the property's value and market potential. Furthermore, Leeming addressed the impact of the drought in the Western Cape on Sun International's business operations. While there have been some concerns, particularly in Table Bay, where international visitors have postponed trips to Cape Town, the company has taken measures to mitigate risks, such as water sustainability initiatives at Grand West. Leeming expressed confidence in the country's ability to address the water crisis and noted that the company was well-prepared for any potential challenges. In terms of foreign exchange exposure, Leeming highlighted that Sun International had diversified its debt in different currencies based on the regions of operation. With a significant portion of business in Chile, where debt is in Chilean pesos, the company has mitigated risks associated with emerging market currencies. Additionally, the company benefits from a stronger rand, which aids in importing equipment and licensed software. Overall, Sun International's strategic initiatives focus on addressing debt levels, optimizing asset performance, and navigating external challenges to sustain growth and profitability in the competitive hospitality and gaming industry.