Jason Walbridge started as SkyCity CEO in July 2024. Photo / Jason Oxenham
Jason Walbridge is not expecting any sudden economic rebound this year, which he says is why SkyCity Entertainment Group today downgraded its full-year outlook when it released its 1H25 result.
Despite next February’s convention centre opening and its new hotel going well, neither the CEO nor the company sees conditions improving overall this calendar year to the point that profit targets can be fulfilled.
“While we’re not happy where we are, we’re really pleased with the strong visitation across all our precincts in what’s been a tough economy in New Zealand, so the revised guidance reflects that we see these economic conditions persisting a bit longer,” Walbridge told the Herald today.
“We’ve also had to spend more money than we anticipated in Australia,” he said referring to an $18 million annual spend across the Tasman in this latest period but a forecast three-year $60m outlay in Adelaide to comply with the law.
That would ensure the company met obligations around financial crime and host responsibilities, Walbridge emphasised today.
Even though the Reserve Bank dropped the OCR yesterday, Walbridge said the past six months had shown one thing clearly.
“Customers have less money to spend.
“They’re still coming to visit us, with 5.4 million visitations to our properties here and in Australia over the last six months. If things do pick up sooner than we expected – awesome. When the economy does pick up, we’re going to be a direct beneficiary.”
The company outlined a somewhat grim scenario for the full year today: “We expect the challenging economic conditions to continue to impact discretionary spend into the 2025 calendar year.”
As a result, it doesn’t expect to make the previously forecast $245m-$265m group ebitda for the full year to June 30, 2025.
Instead, it only now expects $225m-$245m. No dividend is being paid in 1H25.
Lower customer revenues and increased transformational costs were reasons for the lower full-year expectations.
The company cited the programme in Adelaide, called “Building a better business”, which alone will cost around $18m in the FY25 year.
But there is some good news for the company.
“The opening of the NZICC in February 2026 will be a game changer for SkyCity Auckland and for New Zealand,” it said today.
“We expect to see a boost of around 500,000 visitor days a year to SkyCity Auckland with the facility providing a significant lift to the wider Auckland and New Zealand economies.”
The new Horizon Hotel is a significant positive in a challenging market.
Total rooms sold increased by 16% in the half year with an occupancy rate of 73%, ahead of the market.
SkyCity blamed the 73% drop in net profit after tax on interest costs from the resolution of the long-standing gaming duty matter with Revenue South Australia.
“We concluded the casino duty tax matter. It’s nice to have that behind us,” Walbridge said today.
“We’ve got open and regular dialogue happening between ourselves and the South Australian government and regulator in that marketplace. The casino duty matter is historical matter. It’s good to get it behind us.”
On the $18m being spent in Adelaide in FY25, the company was investing heavily and would deliver, Walbridge said.
“It’s taking more people and more technology than we originally thought. We’re committed to seeing this through around preventing financial crime and getting better at host responsibility.”
Over the next three years, the company would spend around $60m in Adelaide alone.
“Yes it’s a significant amount of money. At the conclusion of three years, those costs will no longer be required in our business,” Walbridge said today.
This month, it was reported that SkyCity had to pay $42m back tax and interest to the South Australian government.
The casino and hotel company made only $6.1m net profit after tax for the half-year to December 31, 2024, down 73% on the previous corresponding half-year of $22.5m.
Revenue dropped 5% from $442.8m to $422m and group ebit was down 22% from $144.3m to $113.1m.
Total revenue was lower due to a 12% drop in Auckland gaming revenue, the business said.
Auckland gaming revenue had been impacted by a five-day closure last year.
Anne Gibson has been the Herald’s property editor for 25 years, written books and covered property extensively here and overseas.