The Star has issued a sombre trading update as high rollers continue to avoid its three casinos and the costs associated with its regulatory compliance eat into its earnings.
The country’s second-biggest casino business said on Monday its interim chief financial officer, Neale O’Connell, will also take over chief executive officer duties, as the group continues its recruitment efforts for both roles. Ex-Crown head Steve McCann has been considered to be the frontrunner for the top job since the company’s former boss, Robbie Cooke, abruptly left The Star in March.
The Star expects to report $1.68 billion in revenue this financial year, falling further from its low point in 2023.Credit: Dion Georgopoulos
O’Connell addressed analysts and investors on Monday morning, saying the business expects to make up to $1.68 billion in total revenue across its two casinos in Queensland and one in NSW this financial year. This is a fall from the $1.8 billion in 2023, which was originally thought to be the low point for the embattled business.
The Star said it will post normalised earnings before tax, interest, depreciation and amortisation of between $165 million and $180 million for the 12 months to June 30.
The Star recorded a total loss of $2.44 billion in 2023, with Cooke adamant at the time the group would do better this year.
“We won’t get back to pre-COVID-19 levels, but things are moving in the right direction, and I’m feeling more confident about the operational performance,” Cooke said last September.
However, The Star has since been hit by a second NSW inquiry into its operations to assess how far it’s progressed from the first time its extensive anti-money laundering and counterterrorism breaches were exposed. It’s still yet to secure viability of its casino operations, almost two years after Adam Bell’s initial findings, which led to its NSW licence being suspended.
The Star told investors it is aiming to expedite ways to reduce operating costs, which have grown to $92.5 million this quarter, up from $92 million in Q3 due to increased regulatory costs.
The group’s VIP rooms continue to be the worst performers, while trading across its main gaming floors in Brisbane, Sydney and the Gold Coast has shown single digit growth.
O’Connell said overall visitation had held up quite well despite the cost-of-living crunch and increased competition from pubs and clubs, but it had not been enough to offset the losses in premium revenue.
He told investors the company’s revenue has fallen 4 per cent over the past three months, driven by the fall in premium gaming revenue, which is down 17 per cent overall.
He said the company was looking at potentially selling off “non-core assets”, but declined to comment on the specifics.
“There are a number of challenges in the medium and long term with regards to the balance sheet,” O’Connell said.
The group’s share price fell 7 per cent to 46¢ in mid-morning trade following the update.
The Market Recap newsletter is a wrap of the day’s trading. Get it each weekday afternoon.