Australian casino operator Star Entertainment will axe 500 jobs as it tries to balance a fall in international VIP gaming amid an $118m or three per cent cut to its forecast which saw its share price fall to a four year low.
It is now forecasting full-year earnings of $555m due to the combination of weaker domestic growth and a 31 per cent fall in international VIP revenue.
Star Chief Executive Matt Bekier said some ‘very large customers’ were spending just a couple of days at the casino, instead of a whole week as they usually did.
“The positive is the customers are still coming,” Mr Bekier said. “They just don’t spend as much and take as many risks as they did in the past.”
The company stated in its forecast: “Domestic revenue growth trends across The Star properties have softened since the release of our 1H FY2019 results, with domestic revenue between January 1 and June 8 2019 up 0.3 per cent vs pcp. Total domestic revenue in FY2019 YTD is up 3.1 per cent on the pcp. International VIP2 trends from 1H FY2019 have continued into 2H FY2019, with turnover down 31.1 per cent in 2H FY2019 to June 8 2019. Based on these revenue growth rates, The Star expects FY2019 normalised3 EBITDA in the $550 to 560m range ($568m in FY2018).”
“The slowing of domestic growth in 2H FY2019 reflects a combination of more challenging macroeconomic conditions across our markets, lower hold rates on tables games in private gaming rooms (PGRs) and the impact of disruption from capital works at The Star Sydney. In International VIP over January-May 2019, unique patrons are up 7.6 per cent vs pcp, front money is down
16.5 per cent vs pcp, and turns were 9.5 times (vs 11.3 times in the pcp) with an actual win rate below the 1.35 per cent theoretical win rate. The actual win rate for the year to date (July 2018 to May 2019) remains above the theoretical win rate.”
Image By Maksym Kozlenko – Own work, CC BY-SA 4.0, https://commons.wikimedia.org/w/index.php?curid=40669333