Tsogo Sun Holdings Ltd. (TSH), South Africa’s biggest hotel and gaming company, said fiscal 2014 profit rose 19 percent as an expansion helped boost rates for rooms and revenue from gambling.
Net income climbed to 1.9 billion rand ($183 million) in the 12 months through March from 1.6 billion rand a year earlier, the Johannesburg-based company said in a statement today. Sales increased 9 percent to 10.8 billion rand.
Tsogo Sun, which earns 95 percent of its revenue in South Africa, is expanding through acquisitions and improvement to existing hotels and casinos to compensate for slowing growth of the continent’s second-biggest economy.
While “continued growth in profitability” is encouraging, sustaining the rate of increase is “uncertain due to weaker second-half trading, on-going macroeconomic pressure and weak consumer demand,” Chief Executive Officer Marcel Von Aulock said in the statement.
Tsogo Sun rose as much as 0.7 percent and was trading up 0.2 percent at 28.83 rand as of 10:27 a.m. in Johannesburg. the stock has gained 8.4 percent this year.
Full-year net gaming wins advanced 5 percent to 6.8 billion rand, revenue from rooms jumped 16 percent to 2.2 billion rand and food and drink sales surged 22 percent to 1.06 billion rand, Tsogo Sun said. After spending 2.4 billion rand in fiscal 2014 to add sites, the company has announced about 3.1 billion rand in deals for the period ending March 2015.
Investments are based on expectations that the market will improve in the near future, Von Aulock said in a phone interview from Johannesburg today. “We want to be in a position to take advantage of that when it happens.”
Source: Bloomberg News – Kamlesh Bhuckory