Johannesburg - The ban on public smoking dampened the results of gaming and hotel group Sun International even as revenue rose 8 percent to R10.3 billion for the year to June, helped by a rise in demand for local hotel rooms in as tourism increased.
Headline earnings rose 20 percent to R740 million and diluted headline earnings a share by 18 percent to R7.15.
But profit from gaming, which accounts for about 83 percent, was badly hit in the second half of the year by the ban on smoking in public places, which took effect at the beginning of March.
Chief executive Graeme Stephens said yesterday that in view of “the subdued second half” and the number of expansion plans here and in South America, the final dividend was limited to R1.55 a share, making a total of R2.50 for the year, a rise of 10 percent.
He expected the effect of the ban on smoking, which has also hit Sun International’s casino in Chile, where a similar ban has been imposed, would wear off after several months as smokers adjusted to it.
The group has installed attractive smoking decks, which are due to open next month.
Although South Africa still accounted for most of its profit, the group was planning more expansion in South America, where Stephens said there were “a lot of opportunities”.
The group has signed a new agreement for a development in Cartagena in Colombia, where it hoped to obtain a gaming licence. The city was “a lot like Cape Town”, although not as big. It was the most popular resort in the country, with interesting historical buildings, a warm sea without sharks, and attractive beaches.
Sun International was also looking at a second opportunity in Colombia.
Sun International, which was one of the first to invest in a hotel and casino in Nigeria, is not planning any new ventures on the continent despite forecasts of growth across Africa as the continent’s prosperity increases, which is attracting an increasing number of international hotel groups. Stephens said competition in the market was too saturated.
Sun International recently opened two new hotels in this country. Stephens said the Boardwalk Hotel in Port Elizabeth, which opened at the end of last year, was expected to attract business travellers as well as tourists. He pointed out that there were a number of large businesses in the city, and an increasing number of tourists.
Its new convention centre is aimed at international as well as local conferences.
The Maslow in Sandton, opened earlier this year, targets the business travel market.
The shares gained 3.28 percent to R97.60 on the JSE. - Business Report