New Zealand’s SkyCity Entertainment Group suspends dividend payments for next two years due to ‘difficult’ environment – ​​IAG

New Zealand’s SkyCity Entertainment Group announced early Thursday that it has decided to suspend dividend payments for the remainder of 2024 and throughout 2025 to protect its financial position in light of difficult economic and regulatory conditions.

The company said in a statement that the decision was taken to maintain “prudent liquidity headroom” in light of the 3.75x debt/EBITDA covenant in its financing agreements, particularly in light of a looming AU$67 million (US$45 million) civil penalty from AUSTRAC for previous anti-money laundering violations at SkyCity Adelaide, as well as a further NZ$76 million (US$47 million) committed to the completion of the New Zealand International Convention Center at SkyCity Auckland.

SkyCity also announced that it has revised downward its earnings forecast for the 2024 financial year.

“SkyCity now expects FY24 underlying group EBITDA to be between NZ$280 million and NZ$285 million (US$173 million and NZ$176 million) and FY24 underlying group NPAT to be between NZ$120 million and NZ$125 million (US$74 million and NZ$77 million),” it said. The previous forecast had called for underlying group EBITDA to be between NZ$290 million and NZ$310 million (US$180 million and NZ$192 million) and underlying group NPAT to be between NZ$125 million and NZ$135 million (US$77 million and NZ$84 million).

According to the filing on Thursday, the new forecast is due to the “ongoing challenging economic environment impacting customer spending”, a further delay in the opening of the Horizon Hotel at SkyCity Auckland and a potential increase in casino tax spending in Adelaide related to a recent court ruling on the treatment of loyalty points.

Despite these challenges, the company added that it expects to resume paying dividends starting in fiscal year 2026.