Gaming and hotel group Tsogo Sun on Wednesday reported a 10% drop in first-half adjusted headline earnings to R754m, partly as a result of consumers having little disposal income.

Total income in the six months to September was up just 1% to R6.4bn, after net gaming win dropped by 3% to R3.56bn.

This was partially offset by 2% growth in hotel rooms revenue, a 9% growth in food and beverage revenue and growth in property rental income.

The opening of Time Square casino affected the performance of the gaming division, as well as the high base effect that was created in the first quarter of last year when Montecasino recorded a strong growth.

The underlying operations of the group remain highly geared towards the South African consumer (in gaming) and the corporate market (in hotels).

Revenue for the South African hotels division was up 15% to R1.7bn, in part assisted by the inclusion of the Garden Court Umhlanga and the StayEasy Pietermaritzburg from October 2016 and consolidation of the Hospitality Property Fund.

The offshore division of hotels achieved total revenue of R279m, which was down 17% from a year ago, affected by what the company called a tough economic environment and compounded by a stronger a stronger rand.

“Trading during the first half of the financial year was impacted by the continued pressure on the consumer due to the macroeconomic environment and extremely weak sentiment,” the company said in a statement.

The interim divided declared was down 6% to 32c per share, from the year-earlier period and adjusted headline earnings per share (HEPS) dropped 10% to 79c.

Source: Business Day