Australia’s Star Entertainment Group has downgraded its 2019 profit forecast by 3%, equal to around AU$18 million, due to lower turnover from international VIPs and a weakening domestic market since the turn of the year.
In a trading and earnings update filed with the Australian Securities Exchange on Tuesday, Star said that international VIP trends from the first half of the FY19 financial year had continued in recent months with turnover down 31.1% year-on-year in the five months from 1 January to 8 June 2019. It added that, while unique patrons over the same period were up 7.6%, front money was down 16.5% with win rate also coming in below expectation.
In an analyst call held shortly after release of the company’s trading update, Star Entertainment Group CEO Matt Bekier said VIP players were spending less time than usual at the company’s properties.
“The positive is the customers are still coming, they just don’t spend as much and take as many risks as they did in the past,” he said.
Domestic revenue for the period through 8 June is up 0.3% year-on-year but has been considerably slower in recent months given full year growth since 1 July 2018 is up 3.1%.
“The slowing of domestic growth in 2H19 reflects a combination of more challenging macro-economic conditions across our markets, lower hold rates on tables games in private gaming rooms and the impact of disruption from capital works at The Star Sydney,” the company said in its update.
It added that, based on current estimates, normalized EBITDA for the year ending 30 June 2019 was likely to be in the AU$550 to AU$560 million range, down from AU$568 million in FY2018.
Star Entertainment Group also revealed it is looking to save up to AU$50 million a year from FY2020 onwards as part of a cost management initiative that will see 400 backroom staff let go due to challenging operating conditions.