SkyCity Entertainment Group’s 2026 financial year delivered a meaningful reset across the business, though underlying profitability declined significantly as the company invested in compliance and transformation initiatives. Underlying earnings before interest, tax, depreciation and amortisation fell 22.3% to $181.6 million, while underlying net profit after tax contracted 46.9% to $38.0 million, reflecting the implementation of carded play in New Zealand casinos and challenging consumer conditions across both the Australian and New Zealand markets.
The company made substantial progress on strategic commitments, most notably completing the New Zealand International Convention Centre on time and within its $750 million cost envelope, successfully implementing carded play across all New Zealand casinos, and advancing an asset monetisation programme expected to deliver close to $300 million in gross proceeds by the end of 2026. The NZICC, which opened in February, has already generated promising non-gaming revenue as a major venue for conferences and events, with forward bookings for FY27 expected to drive more than 350 events and 350,000 visitations across the year.
Two developments carry significant implications for shareholders going forward. Management has commenced a formal sales process for its Adelaide business following a heads of agreement with South Australian regulators that includes a $21 million fine and resolves outstanding compliance matters from the Brian Martin report. Separately, SkyCity secured the right to apply for two online casino licenses through a recent auction, at $15 million per license, positioning the company to enter a regulated New Zealand online gambling market estimated at over one billion dollars annually.
The company targets $30 million in cost savings for FY27, expanding to $70 million in FY28, with the programme spanning a business reorganisation affecting approximately 250 roles and supplier contract renegotiations. Capital expenditure is expected to reach approximately $120 million when including the $30 million in online license costs. Management reiterated its previous earnings outlook for FY27, though specific formal guidance was withheld due to macro-economic uncertainty and the timing of online market entry remaining unclear. The Board targets resuming dividend payments in FY28 once capital management objectives are achieved and net debt is reduced to approximately 2.0 times underlying EBITDA.
Investors should monitor the Adelaide sales process timeline and valuation achieved, the progression of online casino license applications and expected market entry in the second half of FY27, and the realisation of the $70 million cost savings target in FY28. The announcement is price sensitive and flagged as material by the ASX.
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About Skycity Entertainment Group Limited (ASX: SKC)
Skycity Entertainment Group Limited operates casinos, hotels, convention facilities, and entertainment venues across New Zealand and Australia. The company’s primary operations include SkyCity Auckland, SkyCity Adelaide, and smaller casinos in Hamilton and Queenstown, as well as an online gaming platform. Its business spans gaming, hospitality, food and beverage, and tourism-related services.
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