Reporting a hefty loss for the first half of this year, South African casino & hospitality giant Sun International has announced plans to cut a large number of jobs, informing that the reduction in workforce would help the company adjust to its shrinking geographical presence amid COVID-19 pandemic.
Earlier this week, Sun International reported that its revenue in the six-month period ending June 30 slipped 50 per cent year-on-year to settle at R3.7 billion (US$223 million). Adjusted earnings during the same six months slipped 96 per cent to just R79 million, which created an operating loss of R706 million.
Some South African casinos began to reopen on July 1, albeit at 50% capacity and with limited hours of operation, while their bar and restaurant operations remained closed. Sun said casino gaming revenue through July was around 39% of July 2019’s figure, but the first 27 days of August showed that figure rising to 56%.
As part of its cost-cutting measures, Sun International decided to permanently close two of its casinos in South Africa, and cut as many as 2,300 jobs. The plans are expected to drag payroll costs down as much as 60 per cent. The operator is undertaking a Section 189A retrenchment exercise that enables businesses to cut significant numbers of unionized workers in case it is done for operational needs.
Anthony Leeming, chief executive officer (CEO) for Sun International, said, “The company had been forced to make some painful decisions, but the staff reductions, along with the R1.2b the group raised through last month’s rights offer, will put the company on a sound footing as it continues to emerge from pandemic lockdown.”
Earlier this year, spread of the deadly coronavirus pandemic forced all of Sun International’s retail properties to suspend their business operations and slip into the dark for several months. Hence, all geographic segments played a contributory role in inflating the company’s first half loss. The company’s South African revenue slipped 55 per cent to R2.47 billion, while Latin American and Nigeria businesses tumbled 57.5 per cent to R1.17 billion and 58 per cent to R66 million, respectively.
It is worth-mentioning here that Sun International is currently undergoing the process of leaving its LatAm operations in Peru, Chile and Argentina. The company is leaving the operations following the company’s recent agreement to sell its majority stake in the Sun Dreams casino & betting business. The company decided to offload the business due to hefty losses that it had been incurring for several quarters even before the onset of the corona virus pandemic.