Sun International's Sun City hotel in North West. Photo: Simphiwe Mbokazi

Johannesburg - Sun International, South Africa’s second-biggest leisure company, said first-half profit dropped 21 percent as gambling revenue stagnated and the cost of eliminating jobs rose.

Net income in the six months ended December fell to 302 million rand from 380 million rand a year earlier, the Johannesburg-based company said in a statement today.

Revenue rose 3.6 percent to 5.41 billion rand, while sales from casinos, accounting for 78 percent of the total, rose less than 1 percent to 4.22 billion rand.

Amid a slowing economy, the company plans to fire as many as 1,700 employees as part of a reorganisation.

While the company is reviewing activities in South Africa, its biggest market, it’s also expanding in Colombia and Panama.

“The full benefit of these initiatives and the wider group restructure will only fully reflect in the 2015 financial year,” it said.

After first-half earnings before interest, taxes, depreciation and amortisation fell 5 percent, “the group is optimistic that it will achieve growth in both EBITDA and adjusted headline earnings” in the final six months of the year.

The company reiterated that the reorganisation will help profit in fiscal 2015.

Sun declined as much as 4.7 percent to 89 rand and was trading down 3.6 percent as of 9:54 a.m. in Johannesburg.

The stock has dropped 12 percent in the past 13 months, in contrast to an 11 percent gain at Tsogo Sun Holdings, South Africa’s biggest leisure operator. - Bloomberg News