Sun International Pushes Out 2300 Employees Facing Harmful After-Effects Of A South African Casino Lockdown

Article by : Helen Sep 9, 2020

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The increased security measures introduced around the world due to Covid-19 have long-lasting consequences. For some gambling operators, restricting tourist traffic has become an insurmountable obstacle to developing and maintaining a business afloat. According to official information, the largest South African casino and hotel operator, Sun International, has to lay off 2,300 employees to reduce the payroll load. Such steps have become a necessary measure to mitigate the consequences of the global pandemic.

In its official report, the parent company announced a reduced amount of revenue that would have been received in the last six months up to June 30. The platform estimated revenues of $223 million. Similar indicators are 50% less than for the same period in 2019. Adjusted profit decreased to $4.76 million.

As a result, the operating loss reached $42.57 million. After facing such disastrous consequences, the service was forced to stop all its assets in the region. Almost all Sun gambling establishments located in South Africa, Latin America, and Nigeria reported that their profits decreased by at least 55%.

To be more precise:

• Revenue dropped by $262.5 million in South Africa.
• The decrease in revenue reached more than $70 million in Latin America.
• Nigeria and Eswatini faced $3.98 million down.

Sun is currently phasing out operations for Latin America, Argentina, and Peru. The brand had already agreed to sell a controlling stake of its casino and betting business in the region before the global epidemic began. Overall, revenue from South African casinos sank 56%. Revenue from slot machines also experienced an unprecedented 52% drop to $18.27 million. The sports betting division of the company recorded a 26% drop to $3.08 million.

It is important to note that some South African casinos could reopen their doors starting July 1. The operator had to ensure guests’ visits at the level of no more than 50% of the possible load. Besides, a prerequisite for the operation was limited opening time and a ban on bars and restaurants’ functioning. Income from casino games during July dipped 39% compared to the same period last year. However, since August, this figure has shown a colossal growth of 56%.

Total revenues from limited payout machines during July were down 49% compared to the same period in 2019. The indicator in August showed a remarkable growth of up to 74%. As the company gradually expanded its online business and resumed sports activities, the brand was once again able to regain last year’s profit margins with a slight edge.

In April 2020, Sun already made an official announcement about the possibility of reducing or completely closing two South African casinos.

The brand is also currently considering a 60% salary cut for its remaining employees. At the same time, the company acts based on a formal labor agreement. This allows it to carry out large-scale reductions of employees who are members of the trade union if necessary to quickly solve operational problems. Sun’s CEO Anthony Leeming added that the company is forced to make painful decisions and lay off many employees to get out of the recession caused by Covid-19 as soon as possible.

Leeming stated that the brand might not have sold its Latin American units if it hadn’t been for the coronavirus’s aftermath. Nevertheless, according to the head of the company’s statement, the profit from gambling establishments in the region has never shown exceptional results. This seems a real reason to sell the assets in the area to avoid further income decline.

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