Star Entertainment group has wiped $12.6m from its 2019 profit forecast, after its international VIP turnover and domestic market performance declined during the first half of 2019.
The Australian gaming and entertainment group reduced its projection by three percent in a filing to the Australian Securities Exchange, noting H119 trends were noticeably beginning to impact trading going forward.
“The positive is the customers are still coming, they just don’t spend as much and take as many risks as they did in the past,” said CEO Matt Bekier.
“The slowing of domestic growth in 2H19 reflects a combination of more challenging macroeconomic conditions across our markets, lower hold rates on tables games in private gaming rooms and the impact of disruption from capital works at The Star Sydney.”
The company reported that the five months from 1 January to 8 June saw turnover fall 31.1 percent year-on-year, with front money from VIP guests falling 16.5 percent despite player numbers rising 7.6 percent.
An analyst call held by Bekier following the trading update outlined the fact that VIP players were still regular visitors, however the average time spent playing had fallen throughout 2019, exacerbated by win rate falling below expectations.
Though domestic revenue for the period constitutes a minor increase of 0.3 percent, the figure represents an overall decline in comparison with full year growth of 3.1 percent since 1 July 2018.
Alongside the disappointing revenue results, Star Entertainment also revealed it would seek to save $35m per year from 2020, part of a “cost management initiative” that will see 400 backroom staff made redundant in light of challenging operating conditions.
Star Entertainment have also been tasked with replacing cladding on its Star Sydney property over fire risks flagged by the city’s fire department, with a spokesperson for the venue stating in July that it was “ engaging proactively with the department on short and longer-term solutions.”