Casino group Sun International to axe 2300 workers in South Africa
South African casino and hospitality giant Sun International could be forced to retrench up to 2300 workers, as the covid-19 pandemic severely hits their bottom line.
The latest interim report paints a bleak picture for the gambling industry in South Africa, which was forced to shut down completely from late March until June 30.
Sun International moved quickly following the announcement of lockdowns in markets they operate in, including reducing payroll and cutting operational costs. They also closed Naledi and Carousel casinos and sold several other non-core assets.
“We’ve had to make some painful decisions, but I’m extremely proud of the speed and effectiveness of our response, which has put the group on a sound footing as we push ahead now that lockdown restrictions have been significantly eased in South Africa,” Sun International CEO Anthony Leeming said.
“Before the lockdown took effect in March, our ongoing efforts to manage costs, implement efficiencies and improve the customer experience were bearing fruit, with the group achieving growth in revenue, EBITDA and the EBITDA margin.
“Debt was well under control, with the benefits of deleveraging reflecting strongly in the financial results.
“This strong position has helped us to ride out the COVID-19 storm while improving operational efficiencies and articulating plans to restructure certain parts of the business.”
The company also raised R1.2 billion after a successful rights offer, with this money earmarked to help with liquidity and post-pandemic recovery.
But the extenuating circumstances brought on by the coronavirus saw a decline of 56% in consolidated income, dropping from R8.5billion to R3.7 billion, and EBITDA reduced by 96% from R2.1 billion to R79 million.
This has led to the company undertaking a Section 189A retrenchment exercise, with the company saying in their interim results released at the end of August, that it could impact as many as 2300 employees in South Africa. These staff cuts could save as much as R280million in wages.
This proposed retrenchment exercise in particular impacts Sun City, Maslow Sandton, Boardwalk, The Table Bay and Wild Coast, Leeming said.
“The Covid-19 pandemic required us to undertake a deeper review as we anticipate that it will take some time for our properties, in particular our hotels and resorts, to recover.”
Sun International has already enacted a voluntary redundancy process in Chile, where they hope to cut as many as 1000 staff. To date 451 employees have accepted.
Sun International also put in place a stringent covid-safe plan for customers and staff before they reopened in South Africa on June 30, including abiding by a government guideline to cap the amount of people in venues.
The struggle of the gambling giant during the pandemic, contrasts to other countries that have regulated online casinos, with these industries coping much better during extended lockdowns.
The South African Government has shown a growing willingness to regulate online casino industry, with live casino games now allowed at licensed betting sites.
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